The 


Successful  Agent 

PRACTICAL  HINTS  FOR  THE 
SELLER  OF  LIFE  INSURANCE 


THE    PRINCIPLES    OF    INSURANCE     EXPLAINED 

SO     SIMPLY     THAT     ANY     LAYMAN 

CAN    READILY  UNDERSTAND 


BY   WILLIAM    ALEXANDER 


PRICE:  CLOTH,  $2.oo;  FLEXIBLE  LEATHER,    $2.50 


1907 
HE  SPECTATOR  COMPANY 

135  WILLIAM  STREET 


NEW  YORK 


GENERAL 


Copyright  1907 

By  THE  SPECTATOR  COMPANY 
NEW  YORK 


PREFACE 


The  object  of  this  book  is  practical ;  to  tell  the  agent 
what  he  must  know  to  be  successful  in  selling  life  insur- 
ance. 

The  author  believes  that  he  is  competent  to  give 
advice  because  he  has  had  thirty  years  of  experience, 
during  which  time  he  has  given  a  great  deal  of  atten- 
tion to  the  instruction  of  agents,  and  has  seen  the 
practical  results  of  his  work. 

His  identification  with  a  particular  company,  more- 
over, has  given  him  a  knowledge  of  which  the  outsider 
is  ignorant.  Indeed,  experience  shows  that  the  mere 
theorist,  or  the  man  acquainted  with  field  work  only, 
lacks  much  necessary  information.  Hence  the  author 
believes  that  he  enjoys  a  distinct  advantage  as  a 
teacher. 

His  aim  is  to  give  information  which  shall  be  as 
useful  to  the  agent  of  one  company  as  to  the  agent  of 
another.  In  this  volume  he  advocates  no  company 
or  companies,  and  champions  only  the  great  cause 

Of   LIFE   INSURANCE. 

It  is  his  hope  that  any  agent  who  reads  will  find 
the  book  a  means  of  increasing  his  income;  and  that 
any  layman  who  reads  will  recognize  its  teachings 
as  disinterested  and  unbiased. 

While  these  explanations  are  primarily  for  begin- 
ners, it  is  believed  that  much  will  be  found  of  use  by 


164068 


4  PREFACE 

veteran  agents,  or  by  the  employers  of  canvassers, 
as  well  as  by  laymen  who  seek  enlightenment  regard- 
ing the  so-called  mysteries  of  life  insurance. 

In  the  early  chapters  some  elementary  truths  are 
necessarily  discussed.  If  the  reader  should  skip  these 
as  unimportant  or  dry,  it  is  doubtful  whether  the  body 
of  the  book  will  prove  either  entertaining  or  profit- 
able ;  for  unless  the  A,  B,  C  of  the  subject  is  learned 
the  language  used  thereafter  will  be  obscure,  and  the 
lessons  taught  will  have  little  practical  value. 


TABLE  OF   CONTENTS 


BOOK  I 

CHAPTER  I. 

PAGE. 

WHAT  THE  AGENT  MUST  KNOW 13 

The  average  citizen  is  ignorant  and  must  be  enlightened.  Life 
insurance  depends  on  the  law  of  mortality  as  applied  to  a  large 
body  of  people.  Its  relations  to  the  individual  can  only  be 
understood  after  some  knowledge  has  been  obtained  of  the  manner 
in  which  it  applies  on  the  average  to  this  large  body. 

CHAPTER  II. 

A  FEW  FUNDAMENTAL  TRUTHS 18 

The  average  duration  of  life  of  a  multitude  of  people  may  be  accurate- 
ly determined. 

CHAPTER  III. 

COST  OF  INSURANCE  ON  THE  NATURAL  BASIS 23 

How  to  discover  cost  by  utilizing  mortality  table. 
TABLE  OP  NET  NATURAL  PREMIUM  RATES. 

CHAPTER  IV. 

THE  SINGLE  PREMIUM 38 

How  the  net  single  premium  is  computed.  TABLE  OP  NET  SINGLE 
PREMIUM  RATES. 

CHAPTER  V. 

THE  LEVEL  PREMIUM 31 

How  computed.     TABLE  OF  NET  LEVEL  PREMIUM  RATES. 

CHAPTER  VI. 

THE  GROSS  PREMIUM 35 

The  "gross"  premium  includes  a  "loading"  for  expenses,  which, 
when  added  to  the  net  premium,  gives  the  correct  rate  to  charge. 

CHAPTER  VII. 

SECURITY 39 

A  life  insurance  company  organized  on  a  scientific  basis  cannot  fail 
if  prudently  and  skillfully  managed.  Surplus. — Relations  between 
assets,  liabilities  and  surplus.  The  Reserve  explained. 

CHAPTER  VIII. 

STANDARDS  OF  VALUATION 44 

Why  the  reserve  need  not  be  as  large  as  the  policy  obligations. 
Why  it  is  that  the  lower  the  rate  of  interest  employed  the  higher 
the  standard  of  valuation.  INSURANCE  REPORTS.  PUBLICATIONS 

THAT  THE  AGENT  WlLL   FlND   USEFUL. 


6  TABLE  OF  CONTENTS 

CHAPTER  IX. 

PAGE. 

ADEQUATE  PREMIUMS  MUST  BE  CHARGED 49 

Assessment  companies  have  failed  because  their  charges  have  been 

inadequate.     Insurance  on  the  natural  basis.     The  agent  must  be 

able  to  show  the  strong  points  of  his  own  company. 

CHAPTER  X. 

DIVIDENDS 54 

What  dividends  are  and  how  they  are  paid.  Three  Ways  of  Conducting 

the  Business:     1.  Mutual  companies.     2.   Proprietary  (or  stock) 

companies.     3.  Mixed  companies. 

BOOK  II 

CHAPTER  I. 

THE  POLICY  CONTRACT 63 

The  agent's  relations  to  the  contract.  The  application,  medical 
examination,  and  policy.  General  advice  to  the  agent. 

CHAPTER  II. 

POLICY  CONTRACT  (Continued) 71 

The  best  policy  for  a  particular  man  is  the  one  that  fits  his  circum- 
stances best.  Different  policies  described. 

CHAPTER  III. 

POLICY  CONTRACT  (Continued) 79 

The  salient  features  of  various  kinds  of  insurance.  Different  ways 
of  settling  policies  at  maturity. 

CHAPTER  IV. 

THE  NEW  INSURANCE  LAW  IN  NEW  YORK 84 

THE  STANDARD  POLICY. 

BOOK  III 

CHAPTER  I. 

THE  AGENT  A  SPORTSMAN 93 

Analogies  between   fishing   and   canvassing.     The  successful   agent 

a  mighty  hunter.     The  agent  exists  because  he  is  indispensable 

to  the  public. 

CHAPTER  II. 

DIGNITY  OF  THE  AGENT'S  CALLING 99 

It  is  on  a  par  with  the  learned  professions.  It  gives  scope  for  the 
highest  attainments  and  ambitions.  Its  many  advantages  illus- 
trated. 


TABLE  OF  CONTENTS  7 

CHAPTER  III. 

PAGE. 

GENERAL  ADVICE 103 

What  the  agent  must  do  first.     What  his  qualifications  must  be. 

Why  any  man  of  integrity,  industry  and  intelligence  can  succeed. 

Scope  of  modern  life  insurance. 

CHAPTER  IV. 

HOW  THE  AGENT  MUST  BEGIN 109 

He  must  insure  himself.  He  must  look  prosperous  if  he  wishes  to 
prosper.  Why  dishonesty  is  not  the  best  policy. 

CHAPTER  V. 

HOW  TO  FIND  CLIENTS * 114 

Cultivate  friends  and  make  acquaintances.     How  to  get  at  people. 

The   importance   of   tact.     Prejudices   must   be   overcome.     The 

agent  must  have  energy,  originality,  ingenuity. 

CHAPTER  VI. 

THINGS  TO  DO  AND  TO  AVOID 122 

The  agent  must  adapt  himself  to  circumstances.  The  injury  result- 
ing to  the  agent  through  ' '  twisting  "  and  rebating.  The  agent  must 
do  a  lot  of  thinking  first,  and  a  lot  of  work  afterwards. 

CHAPTER  VII. 

TIME  IS  MONEY  TO  THE  AGENT 126 

How  time  may  be  economized  and  used  so  as  to  do  the  most  good. 

CHAPTER  VIII. 

ORGANIZATION  AND  CONCENTRATION 132 

The  importance  of  system.  The  business  of  the  agent  must  be 
carefully  organized.  What  experts  have  said  on  this  subject. 

CHAPTER  IX. 

CONFIDENCE 135 

All  business  is  based  on  confidence.  No  agent  who  fails  to  secure 
the  confidence  of  his  customers  can  hope  for  permanent  success. 

CHAPTER  X. 

USE  YOUR  WITS 138 

The  importance  of  devising  new  and  striking  methods.    Argument  in 

favor  of  endowment  insurance.     The  annuity  as  an  entering  wedge, 

and  as  a  weapon  of  defense.     Other  illustrations. 

CHAPTER  XI. 

THE  RIGHT  POINT  OF  VIEW 144 

A  policy  is  an  asset,  not  an  expense.     The  sense  in  which  all  life 

insurance  is  an  investment.     When  is  a  man  adequately  insured? 

Other  illustrations. 


8  TABLE  OF  CONTENTS 

CHAPTER  XII. 

PAGE. 

INCIDENTAL  ARGUMENTS 152 

The  incidental  benefits  of  insurance  are  more  attractive  to  many 
people  than  its  direct  advantages. 

CHAPTER  XIII. 

POPULAR  FALLACIES 155 

Examples  of  the  obstacles  that  beset  the  agent's  path,  and  how  to 
sweep  them  away. 

CHAPTER  XIV. 
THE  GENERAL  AGENT 161 

CHAPTER  XV. 
A  PARTING  SHOT 165 


APPENDIX  A. 
HOW  TO  COMPUTE  THE  SINGLE  PREMIUM 167 

APPENDIX  B. 
HOW  TO  COMPUTE  THE  LEVEL  PREMIUM  ........  171 

APPENDIX  C. 

THE  PURE  ENDOWMENT,  THE  TERM  POLICY, 
THE  ENDOWMENT  POLICY 175 

APPENDIX  D. 

ANNUITIES 179 

APPENDIX  E. 
EXPECTATION  TABLE 185 

APPENDIX  F. 
POPULAR  FALLACIES 187 

APPENDIX  G. 
DEFERRED  DIVIDENDS 196 

APPENDIX  H. 
TWISTING  EXPLAINED 201 


BOOK   I 


THE  TRUSTWORTHINESS  OF  THE  WARES 
THE  AGENT  HAS  TO  SELL. 


THE    SCIENTIFIC    PRINCIPLES    ON    WHICH    LIFE    IN- 
SURANCE IS  BASED,  AND  HAS  FLOURISHED  FOR 
A   CENTURY    AND    A    HALF. 


INTRODUCTION  TO  BOOK  I. 


Life  Insurance  is  not  an  expensive  luxury.  It  is  a 
necessity  of  modern  civilization.  That  this  is  recognized 
is  proved  by  the  fact  that  the  life  insurance  companies  of 
the  United  States  (excluding  assessment  and  fraternal 
organizations)  now  have  about  $13,000,000,000  at  risk; 
that  the  companies  of  other  countries  have  upwards  of 
$11,000,000,000  at  risk,  and  that,  consequently,  the  life 
insurance  companies  of  the  world  are  responsible  at  the 
present  time  for  insurances  aggregating  TWENTY  FOUR 

BILUONS   OF   DOLLARS. 

That  this  recognition  is  not  all  pervading  and  complete, 
however,  is  indicated  by  the  circumstance  that  there  are 
multitudes  of  men  throughout  the  civilized  world  who 
need  insurance  but  who  have  thus  far  failed  to  avail 
themselves  of  its  protection. 

This  failure  is  due  to  a  variety  of  causes:  ignorance, 
doubt,  heedlessness,  improvidence,  selfishness  and  pro- 
crastination. 

It  is  the  province  of  the  agent  to  convert  such  people. 
And  it  is  a  significant  fact  that  even  those  who  clearly 
recognize  the  value  of  insurance  seldom  act  until  per- 
suaded by  the  agent  to  do  so.  Hence  the  agent  occupies 
a  broad  and  influential  field.  But  to  succeed  in  his  im- 
portant mission  he  must  master  the  principles  of  life 
insurance.  Otherwise  he  will  not  be  able  to  enlighten 
the  ignorant,  convince  those  who  are  sceptical,  satisfy 
the  doubting,  or  spur  the  dilatory  to  action. 


12  INTRODUCTION  TO  BOOK  I. 


To  the  average  man  life  insurance  is  an  inexplicable 
mystery,  and  with  many  its  stability  and  utility  are 
seriously  questioned. 

Consequently  it  is  essential  that  the  agent  should  know 
of  his  own  knowledge  that  it  is  established  on  fixed  scien- 
tific principles.  He  must  understand  the  theories  on 
which  it  is  based  and  be  able  to  demonstrate  its  stability 
and  value.  He  must  be  competent  to  show  clearly  what 
it  offers  to  do  and  how  it  accomplishes  its  aims.  In  short, 
he  must  be  prepared  to  show  that  it  is  safe  beyond  all  per- 
ad venture  and  well  worth  the  money  it  costs  to  obtain  it. 
Then,  and  then  only,  will  he  be  able  to  induce  men  and 
women  to  insure. 


THE   SUCCESSFUL  AGENT 


CHAPTER     I. 
WHAT    THE    AGENT    MUST    KNOW. 

It  is  conceivable  that  a  man  who  cannot  read  could 
sell  books,  and  that  a  man  who  knows  little  about 
life  insurance  could  sell  policies.  But  the  really 
successful  agent  must  utilize  in  his  business:  (1)  A 
comprehensive  knowledge  of  life  insurance  in  general ; 

(2)  the  strong  points  of  the  company  he  represents; 

(3)  the  selling  qualities  of  the  goods — the  policies — 
he  has  to  offer,  and,  (4)  the  best  rules  for  organizing 
and  carrying  on  his  work. 

Each  agent  must  gather  for  himself  the  information 
covered  by  the  second  of  the  foregoing  divisions. 
The  other  three  will  be  dealt  with  in  this  book. 

THE  AGENT  MUST  BE  ABLE  TO  IMPART  HIS  KNOWLEDGE. 

The  agent  who  attempts  to  explain  life  insurance 
to  his  customers  must  understand  life  insurance  him- 
self. And  the  best  way  for  him  to  discover  what 
information  he  must  acquire  for  this  purpose,  will  be 
to  find  out  how  little,  or  how  much,  his  customers 
already  know,  and  then  see  how  well  prepared  he  is 
to  supply  the  facts  that  are  lacking. 


14  THE  SUCCESSFUL  AGENT 

In  most  cases  it  will  only  be  necessary  to  announce 
one  or  two  truths,  or  correct  one  or  two  errors;  but 
the  agent  himself  must  be  fully  informed,  so  as  to 
deal  with  the  varying  needs  of  different  people.  And 
a  few  elementary  truths  clearly  stated  will  throw  a 
flood  of  light  into  the  mind  of  many  a  man  who  re- 
gards life  insurance  as  an  insoluble  mystery. 

But  at  the  very  outset  the  agent  must  remember 
that  his  object  is  not  to  make  an  insurance  expert 
of  his  customer.  His  province  is  simply  to  give  a 
clear  view  of  what  life  insurance  tries  to  do,  and  how 
it  succeeds  in  accomplishing  its  aims.  His  practical 
object  being  to  show  first  that  life  insurance  is  based 
on  scientific  principles,  and  then  that  his  customer 
can't  do  without  it. 

WHAT  LIFE  INSURANCE  IS,  AND  HOW  IT  WORKS. 

When  a  man  sees  a  reaping  machine  and  does  not 
know  what  it  is,  he  will  wish  to  know  first  what  it  is 
for,  and  then  how  it  works. 

A  man  who  knows  nothing  about  life  insurance 
will  wish  to  know  first  what  it  is  for — what  it  accom- 
plishes— and  then  how  it  achieves  its  ends — with  what 
accuracy  and  reliability  it  works.  In  other  words, 
whether  it  is  safe,  and,  in  addition  to  being  safe,  will 
prove  adequately  remunerative  if  he  invests  his  money 
in  it. 

IGNORANCE    OF    THE    AVERAGE    CITIZEN. 

If  the  agent  will  accompany  me  to  some  point  of 
vantage,  and  will  watch  with  me  an  imaginary  citizen 


WHAT  THE  AGENT  MUST  KNOW  15 

whose  interest  has  been  awakened  in  life  insurance, 
we  shall  be  able  to  gather  some  valuable  information. 

Let  us  assume  that  this  citizen  (whom  we  may  for 
convenience  call  Mr.  Smith)  is  a  shrewd,  hard-headed 
fellow,  who  makes  it  a  rule  when  he  determines  to 
investigate  any  subject,  to  go  at  it  in  an  energetic, 
straightforward,  practical  way.  And  let  us  assume 
that,  having  no  agent  to  help  him,  he  starts  out  alone 
to  gather  such  information  as  he  can  for  himself. 

If  so,  he  will  probably  go  directly  to  some  reputable 
company. 

Presumably  any  officer  of  the  company  will  cheer- 
fully place  himself  at  the  visitor's  disposal,  but,  to  be 
definite,  let  us  suppose  that  Mr.  Smith  is  introduced 
to  the  Secretary. 

Smith  will  tell  the  Secretary  that  he  knows  some- 
thing about  fire  insurance — if  his  building  burns,  the 
fire  company  will  replace  it — how,  he  does  not  quite 
understand. 

He  infers  that  life  insurance  is  much  like  fire  in- 
surance— if  a  man  dies  prematurely  (although  his  life 
cannot  be  restored,  and  although  his  widow  cannot 
be  given  a  new  husband)  the  company  can  pay  the 
widow  a  round  sum  of  money.  And  that,  of  course, 
is  worth  while.  How  the  company  can  afford  to  pay 
a  large  sum  when  it  has  received  only  a  small  sum  is 
a  mystery ;  but  that  is  not  his  concern. 

What  concerns  him  is  the  fact  that  the  man  who 
does  not  die  prematurely  runs  the  risk  of  paying  so 
much  money  into  the  company  that  he  (Smith)  can't 
for  the  life  of  him  see  how  any  benefit  could  result  to 


16  THE  SUCCESSFUL  AGENT 

him  from  the  transaction.  Nevertheless,  remember- 
ing that  "you  can't  fool  all  the  people  all  the  time/1 
he  assumes  that  there  must  be  a  satisfactory  explana- 
tion, or  there  wouldn't  be  life  insurance  companies 
all  over  the  world — some  of  them  with  hundreds  of 
thousands  of  policyholders  and  hundreds  of  millions 
at  risk. 

In  answer  to  all  this,  the  Secretary  will  advance 
two  propositions. 

1.  Life  insurance  depends  on  the  LAW  OF  MORTALITY 
as  applied  to  a  LARGE  BODY  OF  PEOPLE. 

2.  Insurance  as  it  relates  to  the  individual  can  only 
be  understood  after  some  knowledge  has  been  obtained 
of  the  manner  in  which  it  applies  on  the  average  to  this 
large  body  of  people. 

INSURANCE  DEPENDS  ON  LARGE  AVERAGES. 

Smith  may  object  that  he  is  indifferent  to  the  fate 
of  others,  and  wishes  to  concentrate  his  attention  on 
his  own  case. 

But  the  Secretary  must  explain  that  in  seeking  to 
understand  life  insurance  by  looking  at  a  single  trans- 
action, Smith  confronts  a  stumbling  block  over  which 
ninety-nine  men  out  of  every  hundred  tumble  when 
they  begin  their  investigation  of  this  subject;  and 
that  such  men  usually,  after  picking  themselves  up 
and  rubbing  their  shins,  give  up  altogether  the  pur- 
suit of  knowledge  about  insurance,  and  hobble  off  in 
some  other  direction. 

"Consider  your  own  case  for  a  moment,"  says  the 
Secretary,  "you  tell  me  that  you  are  35  years  of  age, 


WHAT  THE  AGENT  MUST  KNOW  17 

and  that  you  can  afford  to  lay  by  from  your  income 
$300  a  year.  If  so,  I  am  able  to  tell  you  that  a  policy 
for  $10,000  will  cost  you  $281.10*  down,  and  the  same 
sum  annually  thereafter,  as  long  as  you  live.  I  can 
tell  you  further  that  if  you  make  your  first  payment 
(called  the  premium)  today,  and  die  tomorrow,  the 
company  will  at  once  pay  your  widow  $10,000. 
Whereas,  if  you  do  not  die,  you  must  continue  to  pay 
the  same  premium  from  year  to  year,  as  long  as  you 
live ;  and  the  return  to  your  widow  at  your  death  will 
be  the  same  sum,  namely,  $10,000." 

"But/'  continues  the  Secretary,  "I  cannot  tell 
you  whether  you  will  die  tomorrow,  or  ten  years  hence, 
or  thirty  years  hence.  Consequently,  I  cannot  tell 
you  when  your  widow  will  get  her  $10,000,  or  whether 
you  will  pay  a  small  sum  or  a  large  sum  for  your  in- 
surance. Nor  can  I  tell  you  (if  we  confine  our  scrutiny 
to  your  individual  case)  how  it  is  that  we  can  pay 
$10,000  if  you  die  tomorrow  as  readily  as  we  can  pay 
the  same  sum  if  you  live  for  thirty  or  forty  years. 
Nor,  if  we  thus  confine  our  attention  to  one  trans- 
action, can  I  prove  to  you  that  life  insurance  is  a  good 
thing  in  general,  and  a  good  thing  for  you  in  par- 
ticular. " 

After  listening  to  all  this,  Smith,  if  a  reasonable 
man,  will  permit  the  Secretary  to  continue  his  explana- 
tions in  his  own  way,  whether  he  sees  any  sense  in 
such  a  course  or  not. 

*This  is  the  rate  charged  by  a  number  of  representative  companies  for 
an  "ordinary  life,  participating  policy."  Certain  companies  charge  a  trifle 
less. 


CHAPTER     II. 
A  FEW  FUNDAMENTAL  TRUTHS. 

The  Secretary  will  then  explain  that  life  insurance 
is  utilized  in  a  great  variety  of  ways,  and  accomplishes 
many  useful  purposes,  but  that  as  Smith  has  caught 
on  to  the  fact  that  through  insurance  a  man  can  pro- 
tect his  wife  and  children,  and  as  that  is  the  object 
he  has  in  view,  and  as  that  is  its  first,  simplest,  and 
most  obvious  purpose,  it  will  be  well,  for  the  time 
being,  to  center  attention  on  that  kind  of  insurance. 

The  Secretary  will  then  explain  the  necessity  of 
glancing  for  a  moment  at  the  law  of  mortality,  and 
a  few  other  technical  matters  that  must  be  understood 
in  advance  by  any  man  who  expects  to  understand 
life  insurance  in  general,  or  its  exact  application  to 
his  own  needs. 

THE  LAW   OF  MORTALITY. 

If  you  toss  a  coin  twice,  it  may  come  up  heads  both 
times  or  tails  both  times;  but  if  you  toss  it  twenty 
thousand  times,  heads  will  come  up  ten  thousand 
times,  and  tails  ten  thousand  times;  thus  illustrating 
the  well-known  fact  that  although  the  law  of  average 
works  with  exactness  when  applied  to  a  large  number 
of  happenings,  it  works  very  imperfectly  when  applied 


A  FEW  FUNDAMENTAL  TRUTHS  19 

to  a  few  happenings,  and  cannot  apply  at  all  in  the 
case  of  an  isolated  event. 

THE  LIFE  OF  THE  INDIVIDUAL   IS  UNCERTAIN,  BUT  THE 

AVERAGE    DURATION    OF     LIFE    OF    A    MULTITUDE 

OF  PERSONS  MAY  BE  ACCURATELY  DETERMINED. 

Nothing  is  more  uncertain  than  the  life  of  one  man. 
Nor  can  any  accurate  prediction  be  made  of  the  prob- 
able duration  of  life  of  fifty  men,  or  one  hundred  men, 
or  even  one  thousand  men.  But  experience  proves 
that  the  average  duration  of  life  of  a  large  number, 
such  as  one  hundred  thousand,  may  be  determined 
with  substantial  accuracy. 

The  law  of  average  thus  applied  to  the  duration 
of  human  life  is  called  the  law  of  mortality;  and  the 
statistics  illustrating  this  law,  when  gathered  to- 
gether and  tabulated  are  called  mortality  tables.* 

USE  OF  THE  MORTALITY  TABLE. 

"The  first  thing  I  have  to  show  you,"  says  the 
Secretary,  pushing  towards  Smith  a  printed  page 
covered  with  figures,  "is  The  American  Experience 
Table  of  Mortality." 

"Hold  on,"  says  Smith,  "let's  keep  away  from 
figures.  To  me  statistics  are  as  dry  as  ashes,  and  all 

*The  first  mortality  tables  were  based  on  the  death  rates  of  certain  cities, 
but  the  more  accurate  tables  now  Jn  use  are  based  on  the  statistics  gathered 
by  the  insurance  companies  themselves. 

The  table  which  has  been  used  more  than  any  other  in  the  United  States 
is  the  American  Experience  Table,  giving  the  experience,  for  a  term  of  years, 
of  one  of  the  oldest  and  largest  of  the  American  companies.  There  are 
later  tables  that  are  more  comprehensive  and  exact,  but  this  table  has  proved 
a  safe  and  reliable  guide,  and  is  convenient  for  purposes  of  illustration. 


20  THE  SUCCESSFUL  AGENT 

the  mathematics  I  ever  knew  I  forgot  as  soon  as  I 
got  out  of  school.  I  haven't  come  to  you  for  scientific 
training,  but  simply  to  find  out  whether  life  insurance 
is  a  good  thing  for  me  to  invest  my  money  in. " 

To  this  the  Secretary  will  answer,  '  *  I  have  no  inten- 
tion of  boring  you  with  the  intricate  technicalities 
of  the  business,  or  with  complicated  mathematical 
problems.  There  are  certain  facts,  however,  that 
you  must  know,  and  to  comprehend  them  you  must 
glance  at  one  or  two  tables,  and  a  few  simple  arith- 
metical computations  which  any  man  who  keeps  a 
bank  account  can  readily  follow.  These  can  all  be 
disposed  of  in  a  very  short  time ;  and,  if  mastered  and 
remembered,  they  will  make  all  subsequent  explana- 
tions clear  as  crystal;  whereas  if  you  dodge  them,  all 
subsequent  explanations  will  be  obscure.  Moreover, 
I  think  you  will  admit  when  I  have  finished,  that 
these  preliminary  explanations  are  not  without  inter- 
est. For  example:  I  venture  to  say  that  you  will 
not  lay  this  table  of  mortality  aside  until  you  have 
extracted  some  interesting — I  might  almost  say  en- 
tertaining— information  from  it." 

EXPLANATION   OF    MORTALITY   TABLE. 

The  American  Experience  Table  of  Mortality  begins 
with  100,000  persons,  all  10  years  of  age.  Of  these, 
749  will  die  during  the  first  year,  and  only  99,251  will 
attain  the  age  of  11. 

Of  the  survivors,  746  will  die  during  the  second 
year,  and  only  98,505  will  reach  the  age  of  12. 

And  so  on,  from  year  to  year. 


A  FEW  FUNDAMENTAL  TRUTHS 


21 


AMERICAN   EXPERIENCE  TABLE    OF 
MORTALITY 


Age 

Survivors 

Deaths 

Age 

Survivors 

Deaths 

Age 

Survivors 

Deaths 

10 

aoo,ooo 

749  ' 

40 

78,106 

765 

70 

38,569 

2,391 

11 

99,251 

746 

41 

77,341 

774 

71 

36,178 

2,448 

12 

98,505 

743 

42 

76,567 

785 

72 

33,730 

2,487 

13 

97,762 

740 

43 

75,782 

797 

73 

31,243 

2,505 

14 

97,022 

737 

44 

74,985 

812 

74 

28,738 

2,501 

15 

96,285 

735 

45 

74,173 

828 

75 

26,237 

2,476 

16 

95,550 

732 

46 

73,345 

848 

76 

23,761 

2,431 

17 

94,818 

729 

47 

72,497 

870 

77 

21,330 

2,369 

18 

94,089 

727 

48 

71,627 

896 

78 

18,961 

2,291 

19 

93,362 

725 

49 

70,731 

927 

79 

16,670 

2,196 

20 

92,637 

723 

50 

69,804 

962 

80 

14,474 

2,091 

21 

91,914 

722 

51 

68,842 

1,001 

81 

12,383 

1,964 

22 

91,192 

721 

52 

67,841 

1,044 

82 

10,419 

1,816 

23 

90,471 

720 

53 

66,797 

1,091 

83 

8,603 

1,648 

24 

89,751 

719 

54 

65,706 

1,143 

84 

6,955 

1,470 

25 

89,032 

718 

55 

64,563 

1,199 

85 

5,485 

1,292 

26 

88,314 

718 

56 

63,364 

1,260 

86 

4,193 

1,114 

27 

87,596 

718 

57 

62,104 

1,325 

87 

3,079 

933 

28 

86,878 

718 

58 

60,779 

1,394 

88 

2,146 

744 

29 

86,160 

719 

59 

59,385 

1,468 

89 

1,402 

555 

30 

85,441 

720 

60 

57,917 

1,546 

90 

847 

385 

31 

84,721 

721 

61 

56,371 

1,628 

91 

462 

246 

32 

84,000 

723 

62 

54,743 

1,713 

92 

216 

137 

33 

83,277 

726 

63 

53,030 

1,800 

93 

79 

58 

34 

82,551 

729 

64 

51,230 

1,889 

94 

21 

18 

35 

81,822 

732 

-65 

49,341 

1,980 

95 

3 

3 

36 

81,090 

737 

66 

47,361 

2,070 

37 

80,353 

742 

67 

45,291 

2,158 

38 

79,611 

749 

68 

43,133 

2,243 

39 

78,862 

756 

69 

40,890 

2,321 

J. 

22  THE  SUCCESSFUL  AGENT 

Less  than  one-half  the  original  number  will  reach 
the  age  of  65,  and  the  number  of  survivors  will  stead- 
ily diminish  until  at  age  95  only  3  will  remain.* 

By  means  of  this  table,  any  company  can  gather 
facts  and  figures  which  will  enable  it  to  find  out  how 
much  each  one  of  its  customers  must  pay  for  his  in- 
surance. Without  such  a  table  all  would  be  guess- 
work; the  charges  would  necessarily  be  arbitrary; 
some  policyholders  would  pay  too  much  and  others 
too  little. 

In  computing  premiums  it  is  necessary,  not  only  to 
utilize  the  mortality  table,  but  also  to  take  interest 
and  expenses  into  account;  but  to  show,  in  the  sim- 
plest way,  the  utility  of  the  mortality  table,  interest 
and  expenses  may  be  disregarded  for  the  time  being. 

*It  is  presumed  that  these  3  will  die  before  reaching  the  age  of  96. 


CHAPTER     III. 

COST    OF    INSURANCE    ON    THE    NATURAL 
BASIS. 

The  cost  of  insurance  when  computed  on  what  is 
called  the  "natural"  basis  is  determined  for  each  year 
separately. 

We  may  readily  discover,  for  example,  that  the 
correct  charge  (if  we  disregard  interest  and  expenses) 
for  a  man  40  years  old,  for  $1,000  of  insurance  for  one 
year,  is  $9.79. 

Here  is  the  proof: 

Reference  to  the  table  (see  page  21)  will  show 
that  of  the  100,000  persons  with  which  the  table  be- 
gins, those  still  living  at  age  40  will  number  78,106, 
and  that  765  will  die  within  the  following  year. 
Hence,  if  these  people  associate  themselves  together 
to  insure  one  another  for  $1000  each,  the  sum  of 
$765,000  must  be  contributed;  for  $1,000  must  be 
paid  to  the  estate  of  each  one  of  the  765  members 
falling  out  during  the  year. 

To  find  the  exact  sum  which  each  person  would 
have  to  pay  at  the  outset  to  establish  this  fund,  it  is 
only  necessary  to  divide  the  total  amount  by  the 
number  of  contributors.  This  will  show  that  the 
contribution  in  each  case  must  be  $9.79;  for  $765,000 
-=-78, 106  =  $9.79. 

If  the  association  is  continued  for    a  second  year 


24  THE  SUCCESSFUL  AGENT 

each  member  will  necessarily  pay  for  that  year  a 
slightly  increased  charge  (or  premium)  namely, 
$10.55.  There  are  two  reasons  for  this  increase, 
first,  because  the  expense  must  be  borne  by  a  smaller 
number  of  survivors,  and,  second,  because  there  will 
be  more  deaths  during  the  second  year  than  during 
the  first. 

The  amount  which  each  must  pay  will  be  deter- 
mined as  before.  Of  the  77,341  survivors  774  will 
die.  Hence  $774,000  must  be  paid.  Each  member, 
therefore,  must  pay  $10.55;  for  $774,000  —  77,341  = 
$10.55. 

For  the  third  year  a  still  larger  sum  must  be  paid, 
namely,  $785,000;  and  by  a  still  smaller  number  of 
persons,  namely,  76,567. 

Thus  the  cost  of  insurance  on  the  "natural"  basis 
(i.  e.  if  computed  from  year  to  year)  necessarily  shows 
an  annual  increase;  for,  if  we  study  the  average 
duration  of  life  of  a  large  body  of  men  we  shall  find 
that  the  mortality  steadily  increases  as  they  grow 
older. 

INTEREST. 

Thus  far  we  have  disregarded  interest,  but  interest 
happens  to  be  one  of  the  most  important  factors  in  a 
life  insurance  computation.  Therefore,  in  determin- 
ing the  premiums  which  must  be  charged,  the  insur- 
ance company  must  give  its  customers  the  benefit 
of  the  interest  earned. 

Just  here  it  is  necessary  to  note  that  in  life  insurance 
computations,  it  is  the  rule  to  assume  that  all  prem- 


COST  OF  INSURANCE  ON  THE  NATURAL  BASIS     25 

iums  are  paid  at  the  beginning  of  the  year,  and  that 
all  death  losses  are  paid  at  the  end  of  the  year.* 

Now,  in  computing  premiums  on  the  natural  basis, 
it  happens  that  interest  cuts  a  very  small  figure,  be- 
cause none  of  the  money  received  by  the  company  can 
be  held  for  a  longer  period  than  one  year.  Neverthe- 
less, interest  does  modify  the  result.  For  example: 
The  computation  already  made  shows  that  at  age 
40  the  premium  for  $1,000  of  insurance  if  interest 
is  not  taken  into  account  is  $9.79,  whereas  if  interest 
at  the  rate  of,  say,  3%,  is  allowed  the  premium  will 
amount  to'  $9.50. 

When  interest  is  thus  taken  into  account  (if  we 
continue  to  ignore  expenses)  we  obtain  what  is  called 
the  net  (or  pure)  premium.  Here  is  the  table.  § 

"If  then,"  says  Smith,  "I  wish  a  policy  which  will 
yield  my  wife  $1,000  at  my  death,  I  can  obtain  it  at 
my  present  age,  which  is  35,  by  paying  the  company 
$8.68  this  year;  $8.81  next  year;  $8.97  for  the  follow- 
ing year,  and  so  on?" 

"Not  at  all,"  says  the  Secretary,  "no  company 
can  afford  to  sell  insurance  for  the  net  premium.  It 
would  be  possible  if  the  business  could  be  trans- 
acted without  expense,  but  no  business  can  thus 
be  transacted.  Hence,  the  net  premium  must  be 
increased  by  an  allowance  for  expenses.  When  this 
has  been  done,  we  have  the  actual  premium  which 
the  company  must  charge,  called  the  gross  premium. 

*The  companies  now  pay  their  losses  as  they  occur  without  waiting  until 
the  end  of  the  year.  How  they  are  able  to  do  this  I  shall  not  stop  to  explain. 
Here  it  is  sufficient  to  note  the  fact. 

§See  next  page. 


26 


THE  SUCCESSFUL  AGENT 


TABLE  OF  NET  NATURAL  PREMIUM  RATES. 
For  $1,000  of  Insurance  Payable  in  Event  of  Death. 

BASED    ON    AMERICAN    EXPERIENCE    TABLE    AND    3% 


INTEREST. 


AGE 

RATE 

AGE 

RATE 

AGE 

RATE 

10 
11 

7.26 
7.29 

41 

^.50 
9.71 

70 
71 

60.18 
65.69 

12 

7.33 

42 

9.95 

72 

71.58 

13 

>      7.35 

43 

10.21 

73 

77.83 

14 

7.37 

44 

10.51 

74 

84.49 

15 

7.42 

45 

10.83 

75 

91.62 

16 

7.44 

46 

11.22 

76 

99.32 

17 

7.46 

47 

11.65 

77 

107.83 

18 

7.51 

48 

12.14 

78 

117.30 

19 

7.53 

49 

12.72 

79 

127.88 

20 

7.57 

50 

13.38 

80 

140.25 

21 

7.62 

51 

14.11 

81 

153.99 

22 

7.67 

52 

14.94 

82 

169.21 

23 

7.73 

53 

15.85 

83 

185.98 

24 

7.77 

54 

16.89 

84 

205.20 

25 

7.82 

55 

18.03 

85 

228.69 

26 

7.88 

56 

19.30 

86 

257.93 

27 

7.95 

57 

20.70 

87 

294.20 

28 

8.02 

58 

22.26 

88 

356.59 

29 

8.11 

59 

24.00 

89 

384.33 

30 

8.17 

60 

25.92 

90 

441.31 

31 

8.26 

61 

28.03 

91 

516.96 

32 

8.35 

62 

30.38 

92 

615.79 

33 

8.46 

63 

32.94 

93 

712.79 

34 

8.57 

64 

35.79 

94 

832.18 

35 

8.68 

65 

38.95 

95 

970.87 

36 

8.81 

66 

42.44 

37 

8.97 

67 

46.26 

38 

9.12 

68 

50.48 

39 

9.30 

69 

55.10 

COST  OF  INSURANCE  ON  THE  NATURAL  BASIS    27 

"The  gross  premium  is  determined  by  taking  the 
net  premium  and  adding  to  it  a  certain  percentage 
of  itself.  This  percentage  is  called  the  loading,  and 
is  an  extra  charge  sufficient  to  provide  for  all  expenses 
and  contingencies. 

"But  in  explaining  the  difference  between  the  net 
and  gross  premium/'  says  the  Secretary,  "I  have 
wandered  from  the  path.  We  must  finish  with  net 
premiums  before  considering  gross  premiums. 

' '  In  scrutinizing  the  table  of  net  natural  premiums, 
you  have  observed  that  the  charge  at  young  ages  is 
very  small;  that  the  rate  increases  from  year  to  year, 
and  that  at  the  older  ages  it  becomes  very  large. 
Now,  as  few  men  like  to  shoulder  an  increasing  burden, 
little  business  is  actually  done  by  the  insurance  com- 
panies on  this  basis;  but  I  have  explained  it  because, 
as  its  name  implies,  it  is  the  natural  method  if  we  view 
insurance  theoretically. " 


CHAPTER     IV. 
THE    SINGLE    PREMIUM. 

As  the  natural  plan  of  paying  for  insurance  lacks 
popularity,  other  methods  have  been  devised.  One 
of  these  methods  is  for  the  company  to  charge  a 
single  premium. 

To  discover  a  single  premium,  payable  in  advance, 
which  shall  be  equivalent  to  the  series  of  annual  pay- 
ments called  for  on  the  natural  basis,  we  may  proceed 
as  follows: 

Selecting  any  age,  and  starting  with  the  number  of 
persons  who  (according  to  the  mortality  table)  are 
living  at  that  age,  we  must  proceed  to  find  out  first 
what  amount  of  money  will  be  needed  each  year  to 
pay  the  death  losses  of  that  year.  Then,  if  we  should 
take  no  account  of  interest,  the  sum  of  these  items 
would  be  the  total  amount  needed.  But  we  must 
take  account  of  interest;  and  although  we  have  seen 
that  interest  cuts  a  very  small  figure  in  computing 
the  premiums  on  the  natural  basis,  the  reverse  is 
true  when  we  come  to  the  single  premium.  The  com- 
pany receives  all  its  money  in  advance,  while  pay- 
ments to  policyholders  are  made  gradually,  as  deaths 
occur.  Hence,  by  investing  these  receipts,  a  large 
interest  income  is  obtained.  And  as  the  interest 
thus  gathered  is  as  good  for  paying  death  claims  as 
the  money  directly  contributed  by  policyholders, 
the  single  premium  actually  charged  is  considerably 
less  than  would  otherwise  be  necessary. 

To  discover  the  part  of  the  work  which  will  thus 
be  done  by  the  interest  earned  (thus  determining 


THE  SINGLE  PREMIUM  29 

the  correct  net  single  premium)  it  is  only  necessary 
to  discount  (at  a  given  rate  of  interest)  the  sum  of 
money  needed  at  the  end  of  each  year,  to  pay  the 
death  claims  for  that  year,  and  then  to  add  together 
all  the  items  thus  obtained.  These  items  thus  dis- 
counted, when  added  together,  will  make  the  aggre- 
gate premium;  and  this  aggregate  divided  by  the 
number  of  persons  will  give  the  net  single  premium  for 
each  individual. 

"In  the  leaflet  I  now  hand  you, "  says  the  Secretary 
to  Mr.  Smith,  "you  will  find  this  computation  worked 
out  and  verified.  It  is  not  necessary  for  you  to  study 
it  at  once,  but  you  can  do  so  at  your  leisure. " 

"That's  an  excellent  suggestion, "  says  Smith, 
"for  when  I  get  into  the  street  I  can  quietly  throw 
the  leaflet  into  the  nearest  ash  barrel  and  go  on  my 
way  rejoicing." 

"So  you  can, "  answers  the  Secretary,  "but  I  advise 
you  not  to  do  so.  I  hope  you  will  scrutinize  these 
figures;  for  it  is  important  that  you  should 
follow  at  least  one  demonstration  in  order  that 
you  may  know  of  your  own  knowledge  that  there  is 
no  guesswork  about  these  calculations.  After  that 
you  can  afford  to  take  my  word  for  the  fact  that  sim- 
ilar computations  are  accurate  and  adequate.* 


*The  contents  of  the  leaflet  referred  to  above  will  be  found  in  Appendix 
A,  at  the  end  of  this  volume. 

Every  agent  should  master  the  few  simple  arithmetical  computations 
given  in  this  book.  There  is  nothing  he  can  do  which  will  be  of  more 
practical  value  to  him;  for  he  cannot  convince  his  customers  that  life 
insurance  is  an  exact  science  until  he  has  himself  been  convinced. 

While  it  may  not  be  necessary  for  the  general  reader  to  master  these 
demonstrations,  it  is  eminently  desirable  that  he  should  do  so.  For  if  he 
does,  what  is  obscure  to  most  laymen  will  become  clear  and  convincing 
to  him. 


30 


THE  SUCCESSFUL  AGENT 


"For  the  present  it  is  only  necessary  for  you  to 
glance  at  this  table  of  net  single  premiums. " 

TABLE   OF   NET   SINGLE   PREMIUM    RATES. 
For  $1,000  of  Insurance  Payable  at  Death. 

BASED  ON  AMERICAN  EXPERIENCE  TABLE  AND  ASSUMING 
3%    INTEREST. 


AGE 

PREMIUM 

AGE 

PREMIUM 

AGE 

PREMIUM 

21 

$335.68 

46 

$514.30 

71 

$786.82 

22 

340.57 

47 

524.23 

72 

796.67 

23 

345.61 

48 

534.37 

73 

806.28 

24 

350.82 

49 

544.70 

74 

815.69 

25 

356.18 

50 

555.22 

75 

824.93 

26 

361.72 

51 

565.89 

76 

834.01 

27 

367.43 

52 

576.71 

77 

842.97 

28 

373.32 

53 

587.67 

78 

851.80 

29 

379.39 

54 

598.74 

79 

860.49 

30 

385.64 

55 

609.92 

80 

869.06 

31 

392.09 

56 

621.18 

81 

877.42 

32 

398.73 

57 

632.51 

82 

885.60 

33 

405.58 

58 

643.89 

83 

893.63 

34 

412.63 

59 

655.30 

84 

901.59 

35 

419.88 

60 

666.72 

85 

909.51 

36 

427.36 

61 

678.13 

86 

917.32 

37 

435.04 

62 

689.50 

87 

924.88 

38 

442.95 

63 

700.83 

88 

932.02 

39 

451.07 

64 

712.08 

89 

938.75 

40 

459.42 

65 

723.24 

90 

945.23 

41 

468.00 

66 

734.27 

42 

476.80 

67 

745.16 

43 

485.83 

68 

755.88 

44 

495.10 

69 

766.41 

45 

504.58 

70 

776.73 

CHAPTER    V. 
THE  LEVEL  PREMIUM. 

"I  have  now,"  says  the  Secretary,  " explained  two 
ways  of  paying  for  life  insurance.  Which  do  you 
prefer?" 

"I  don't  like  either,"  says  Smith,  "I  have  always 
understood  that  I  could  get  a  policy  by  paying  an 
annual  premium  of  so  much  a  year — the  amount  every 
year  to  be  the  same.  And  that's  what  I  want." 

"You  express  a  general  preference,"  replies  the 
Secretary.  "Few  people  like  to  pay  a  premium  that 
grows  bigger  every  year;  and  few  are  able  or  willing 
to  deposit  a  large  sum  in  advance.  Consequently 
the  actuaries  have  devised  a  third  plan,  called  the 
level  premium  plan. 

"The  level  premium  plan  is  the  popular  plan — the 
one  on  which  substantially  all  the  business  of  most 
of  the  companies  is  transacted. 

"If  you  insure  on  that  plan  you  will  pay  a  uniform 
rate — a  moderate  sum  for  the  first  year,  and  the  same 
sum  for  every  subsequent  year. 

"To  discover  the  correct  amount  to  charge  on/ 
this  basis  the  actuaries  take  a  single  premium  anot 
find  its  equivalent  in  annual  premiums  (or  annuities)! 
to  be  distributed  over  the  period  during  which  the! 
policy  will  remain  in  force. 

"Here  is  another  leaflet,  which  will  show  you  how 


32  THE  SUCCESSFUL  AGENT 

this  equivalent  rate  may  be  computed.*  But  at 
present  it  will  only  be  necessary  for  you  to  glance  at 
a  table  of  the  net  level  premiums."  (See  next  page.) 

PREMIUM   CHARGES   DEPEND   ON  AVERAGE   RESULTS, 
NOT  ON  THE  EXPERIENCE  IN  INDIVIDUAL  CASES. 

From  these  tables  it  will  be  seen  that  the 
net  natural  premium  for  $1,000  of  insurance  at  age 
21,  is  $7.62;  the  single  premium,  $335.68;  and  the 
level  premium,  $14.72. 

Now,,  let  us  assume  that  the  lives  of  three  persons 
have  been  insured  for  $1,000  (one  on  each  plan)  and 
that  death  occurs  in  all  three  cases  before  the  end 
of  the  first  year.  What  will  be  the  result?  On  the 
first  policy  the  company  will  receive  only  $7.62;  on 
the  second  a  much  larger  sum;  namely,  $335.68,  and 
on  the  third,  an  intermediate  sum;  namely,  $14.72. 
And  yet  the  company  must  pay  the  same  amount 
($1,000)  in  each  case. 

Now,  let  us  assume  that  these  three  men,  instead 
of  dying  prematurely,  live  for  many  years  and  then 
die.  The  situation  in  that  event  will  be  reversed. 
The  sum  of  the  premiums  paid  on  the  first  policy 
will  make  its  cost  greater  than  that  of  either  of  the 
others;  and  the  second  policy,  instead  of  being  the 
dearest,  will  turn  out  to  be  the  cheapest  of  the  three ; 
for  the  single  premium  of  $335.68,  paid  in  advance, 
will  represent  the  entire  outlay. 

This  illustrates  the  axiom  that  the  result  in  the  case 
of  any  individual  policy  is  necessarily  eccentric. 


*The  contents  of  this  leaflet  will  be  found  in  Appendix  B  (page    161) 


THE  LEVEL  PREMIUM 


33 


TABLE  OF  NET  LEVEL  ANNUAL  PREMIUM 

RATES. 
For  $1,000  of  Insurance  Payable  at  Death. 

BASED    ON    THE    AMERICAN    EXPERIENCE    TABLE    AND 

ON     THE     ASSUMPTION    THAT     3%     INTEREST 

WILL      BE      EARNED. 


AGE 

RATE 

AGE 

RATE 

AGE 

RATE 

10 

$11.95 

40 

$24.75 

70 

$101.33 

11 

12.15 

41 

25.62 

71 

107.50 

12 

12.36 

42 

26.54 

72 

114.12 

13 

12.58 

43 

27.52 

73 

121.23 

14 

12.81 

44 

28.56 

74 

128.91 

15 

13.05 

45 

29.66 

75 

137.24 

16 

13.29 

46 

30.84 

76 

146.35 

17 

13.55 

47 

32.09 

77 

156.35 

18 

13.83 

48 

33.43 

78 

167.40 

19 

14.11 

49 

34.85 

79 

179.65 

20 

14.41 

50 

36.36 

80 

193.31 

21 

14.72 

51 

37.97 

81 

208.49 

22 

15.04 

52 

39.68 

82 

225.48 

23 

15.38 

53 

41.91 

83 

244.69 

24 

15.74 

54 

43.46 

84 

266.83 

25 

16.11 

55 

45.54 

85 

292.73 

26 

16.51 

56 

47.76 

86 

323.13 

27 

16.92 

57 

50.13 

87 

358.58 

28 

17.35 

58 

52.66 

88 

399.35 

29 

17.80 

59 

55.37 

89 

446.40 

30 

18.28 

60 

58.27 

90 

502.68 

31 

18.79 

61 

61.36 

91 

572.39 

32 

19.31 

62 

64.68 

92 

656.07 

33 

19.87 

63 

68.23 

93 

743.75 

34 

20.46 

64 

72.03 

94 

849.07 

35 

21.08 

65 

76.11 

95 

970.87 

36 

21.74 

66 

80.48 

37 

22  A3 

67 

85.17 

38 

23.16 

68 

90.19 

39 

23.93 

69 

95.57 

34  THE  SUCCESSFUL  AGENT 

Whereas  if  we  consider  a  multitude  of  cases,  and 
view  them  in  the  mass,  we  shall  find  that  it  makes  no 
difference  to  the  company  (theoretically  at  least) 
whether  all  are  insured  on  the  natural  basis,  or 
all  on  the  single-premium  basis,  or  all  on  the  level- 
premium  basis;  or  whether  some  are  insured  on  one 
plan  and  some  on  another.  The  result  on  the  average 
will  be  the  same. 

Thus  is  exemplified  the  fundamental  truth  that  to 
understand  insurance  we  must  never  lose  sight  of 
the  fact  that  the  company  must  base  its  charges  upon 
the  average  result  (which  is  certain)  and  not  upon 
the  expected  fate  of  the  individual  policyholder 
(which  is  uncertain.) 


CHAPTER    VI. 
THE  GROSS  PREMIUM. 

The  Secretary,  having  explained  to  Smith  these 
three  ways  of  computing  the  net  premium,  and 
having  shown  that  life  insurance  is  founded  on 
sound  principles,  has  only  one  thing  further  to  ex- 
plain; namely,  how  the  company  determines  the 
gross  premium — the  premium  which  shall  prove 
adequate  when  expenses  and  contingencies  are  taken 
into  account. 

LOADING   FOR   EXPENSES. 

At  this  point,  the  Secretary  will  be  forced  to  admit 
that  no  company  can  tell  in  advance  precisely  what 
its  future  expenses  will  be  or  what  contingencies  may 
arise.  Therefore  the  management  must  proceed 
with  care  and  discrimination.  Nevertheless,  a  com- 
pany can,  from  observation  and  experience,  make  a 
fair  estimate  of  its  future  expenses;  and  will  con- 
sequently be  able  to  add  a  percentage  to  the  net  rate, 
which,  on  the  one  hand,  shall  not  be  excessive,  and, 
on  the  other  hand,  shall  be  sufficient  to  remunerate 
it  for  the  obligations  it  assumes. 

As  every  agent  has  in  his  rate  book  the  premiums 
charged  by  the  company  he  represents,  tables  of  gross 
premiums  may  be  omitted  here.  I  give,  by  way  of 
illustration,  however,  the  following  examples  of  gross 


36 


THE  SUCCESSFUL  AGENT 


premiums,  for  $1,000  of  insurance,  on  the  Ordinary 
Life  Plan:* 


AGE 

PREMIUM 

AGE 

PREMIUM 

AGE 

PREMIUM 

21 

$19.62 

35 

$28.11 

55 

$60.72 

25 

21.49 

40 

33.01 

60 

77.69 

30 

24.38 

45 

39.55 

65 

101.48 

These  rates  are  found  by  adding  a  loading  of 
to  the  net  premium  derived  from  the  American  Experi- 
ence Table  of  Mortality,  assuming  that  the  money 
employed  will  yield  3%  interest. 

Most  policies,  other  than  those  on  the  ordinary 
life  plan,  excepting  term  policies,  are  loaded  one-sixth 
of  the  net  premium  plus  one-sixth  of  the  ordinary  life 
net  rates.  This  makes  the  percentage  vary  some- 
what at  every  age,  it  being  higher  at  older  ages  than 
at  younger  ages. 

Term  premiums  are  computed  by  adding  the  ordin- 
ary life  loading  to  the  net  term  rates. 

It  is  important  to  note,  just  here,  that  while  it  is 
absolutely  essential  that  the  premiums  charged  shall 
be  adequate,  no  serious  injury  need  result  if  a  little 

*These  are  representative  rates.  Some  foreign  companies  charge  a  trifle 
more,  and  some  American  companies  a  trifle  less.  In  cases  where  com- 
panies use  the  same  mortality  table  and  assume  the  same  rate  of  interest, 
the  net  premium  is  the  same.  Notwithstanding  this  the  gross  premium 
may  differ,  for  the  percentage  added  as  a  loading  may  be  larger  in  one  case 
another. 


THE  GROSS  PREMIUM  37 

more  than  is  necessary  is  charged  ;  provided  the  com- 
pany transacts  its  business  on  what  is  called  the 
mutual  plan,  under  which  it  is  agreed  that  each  policy- 
holder  shall  receive  back  his  share  of  the  unused 
portion  of  the  premiums  paid. 


MUTUAL  PLAN. 

When  the  business  is  conducted  on  the  mutual 
plan,*  the  policyholders  form  the  company.  They 
associate  themselves  together  for  the  purpose  of  insur- 
ing one  another's  lives.  They  are,  in  a  certain  sense, 
partners.  Each  one  pays  something  more  than  is 
necessary,  with  the  understanding  that  the  excess 
shall  be  returned  to  him  in  dividends.  These  divi- 
dends include  profits,  but  the  bulk  of  the  money  thus 
returned  consists  of  the  unused  portion  of  the  prem- 
iums paid. 

Policies  issued  on  this  basis  are  called  participating 
policies,  because  they  participate  in  the  company's 
profits  and  savings. 

THE  SECRETARY  TURNS  SMITH  OVER  TO  AN  AGENT. 

The  Secretary  having  made  these  explanations, 
will  have  given  Smith  all  the  general  information 
necessary.  Consequently  he  will  turn  him  over  to  an 
agent,  who  will  show  him  that  at  his  age  (35)  the 
level  premium  for  $1,000  of  insurance  is  $28.11;  and 
for  $10,000  is  $281.10.  And  we  may  assume  that 
Smith  will  thereupon  draw  his  check  for  $281.10  and 


*The  different  plans  are  explained    on    page  56.     The  mutual  basis  is 
here  employed  simply  by  way  of  illustration. 


38  THE  SUCCESSFUL  AGENT 

go  on  his  way  rejoicing,  knowing  that  he  has  acquired 
title  to  a  fund  of  $10,000  for  the  protection  of  his 
wife  and  children.* 


*In  concluding  these  technical  explanations,  let  me  remind  the  agent 
that  few  applicants  will  wish  to  go  into  all  these  details.  But  the  agent 
must  know  them  so  as  to  be  able  to  answer  such  questions  as  may  be  put 
to  him. 


CHAPTER    VII. 
SECURITY. 

Many  a  man  is  willing  to  gamble  in  stocks,  or  to 
risk  his  money  in  mining  schemes  or  other  speculative 
ventures.  But  when  he  selects  a  permanent  invest- 
ment, especially  if  his  object  is  to  provide  for  the  future 
of  his  family,  his  aim  will  be  to  satisfy  himself  that 
the  investment  is  safe  beyond  all  peradventure. 
Hence,  the  importance  of  the  foregoing  explanations. 
For  if  the  agent  knows  of  his  own  knowledge  that  the 
cost  of  insurance  can  be  accurately  determined,  he 
will  be  able  to  sweep  away  the  doubts  and  fears  which 
he  will  find  lurking  in  the  minds  of  many  of  the  men 
whom  he  will  seek  to  insure. 

SAFETY   GF    THE    INSURANCE   PRINCIPLE. 

Many  life  insurance  companies  have  failed,  but 
any  agent  who  will  take  the  trouble  to  investigate, 
will  find  that  in  every  such  case  the  failure  has  been 
due  either  (a)  to  the  fact  that  the  company  has  been 
organized  on  an  unscientific  basis,  or  (b)  because  it 
has  been  grossly  mismanaged.  For  it  is  an  incon- 
trovertible fact  that  no  company  organized  on  a  sound 
basis  has  ever  failed  IF  IT  HAS  BEEN  PRUDENTLY  AND 

SKILLFULLY  MANAGED. 

There  are  companies  in  the  strong  vigor  of  youth, 
today,  that  have  been  in  business  for  a  century  and 


40  THE  SUCCESSFUL  AGENT 

a  half;  and  most  of  the  large  and  flourishing  com- 
panies now  existing  in  the  United  States  have  been 
in  business  for  fifty  years  or  longer. 

One  reason  for  this  stability  is  that  all  sound  life 
insurance,  as  I  have  already  stated,  is  based  on  the 
law  of  mortality;  a  law  which  illustrates  the  fact  that 
the  average  duration  of  life  may  be  determined  with 
substantial  accuracy  in  advance.  One  hundred  years 
ago  a  famous  English  actuary,  Charles  Babbage, 
said:  " Nothing  is  more  proverbially  uncertain  than 
the  duration  of  human  life  when  the  maxim  is  applied 
to  an  individual.  But  there  are  few  things  less  sub- 
ject to  fluctuation  than  the  average  duration  of  life 
of  a  multitude  of  individuals. "  And  another  expert, 
Dr.  Southwood  Smith,  who  also  studied  this  subject 
when  life  insurance  was  in  its  infancy,  said,  "Mor- 
tality is  subject  to  a  law,  the  operation  of  which  is 
as  regular  as  that  of  gravitation." 

THERE  CAN  BE)  NO  RUN  ON  A  WffE  COMPANY. 

Another  reason  for  the  stability  of  life  insurance 
is  the  fact  that  it  is  not  exposed  to  dangers  which  often 
threaten  the  stability  of  banks,  trust  companies,  and 
other  corporations.  Such  as  financial  panics,  com- 
mercial disturbances,  crop  failures,  etc.  There  can 
be  no  run  upon  a  life  insurance  company,  and  its 
obligations  will  continue  to  mature  with  the  same 
regularity  and  deliberation  during  periods  of  financial 
excitement  as  at  other  times.  For  the  obligations 
of  a  life  insurance  company  are  not  influenced  by 


SECURITY  41 

market  fluctuations,  but  depend  altogether  upon  the 
uniform  workings  of  the  law  of  mortality. 

ADEQUATE  PREMIUMS  INSURE  SAFETY. 

Another  reason  for  this  stability,  in  the  case  of  all 
properly  organized  companies,  is  that  the  charges 
made  are  clearly  adequate. 

After  a  company  has  been  in  business  for  a  few 
years,  it  necessarily  accumulates  a  fund  so  largely  in 
excess  of  the  obligations  which  must  be  paid  immedi- 
ately, that  (provided  its  assets  are  carefully  invested 
and  its  business  prudently  conducted)  it  can  guaran- 
tee with  absolute  certainty  the  fulfilment  of  all  its 
obligations. 

It  is  true  that  instances  may  be  cited  of  companies 
organized  on  a  sound  basis  which  have  died  in  infancy. 
This  at  first  blush  might  seem  to  controvert  the  posi- 
tion I  have  taken;  but  investigation  will  show  that 
in  such  a  case  failure  has  usually  been  due  to  the  fact 
that  a  number  of  death  claims  have  matured  prema- 
turely, and  before  sufficient  funds  had  been  accumu- 
lated to  meet  them.  This,  instead  of  indicating  a 
flaw  in  the  life  insurance  principle,  simply  proves 
that  the  correct  principle  has  been  disregarded.  No 
life  insurance  company  is  safe  until  it  has  a  sufficient 
body  of  policyholders  to  permit  the  law  of  mortality 
to  work  smoothly.  If  a  company  starts  with  an  in- 
sufficient number  of  members  the  deaths  are  likely 
to  occur  at  first  in  an  eccentric  manner,  and  the  com- 
pany may  experience  an  excessive  early  mortality. 

Disaster  due  to  such  a  state  of  affairs  would  obvious- 


42  THE  SUCCESSFUL  AGENT 

ly  be  due  to  mismanagement;  for  the  only  basis  on 
which  an  insurance  company  can  be  firmly  established 
is  either  to  begin  with  a  large  membership,  or  else  to 
have  in  hand  (temporarily  at  least)  a  special  guarantee 
fund  which  may  be  used  to  supply  possible  deficiencies 
while  the  membership  of  the  company  is  small,  but 
which  may  be  withdrawn  after  the  company  has  been 
successfully  launched  and  has  secured  a  sufficient 
number  of  paying  members  to  permit  the  law  of 
mortality  to  work  accurately. 

ASSETS,  LIABILITIES   AND   SURPLUS. 

The  business  of  life  insurance  is  conducted  by  corpo- 
rations. Nevertheless  every  life  insurance  company 
is  neither  more  nor  less  than  a  co-operative  association. 
The  business  is  carried  on  with  the  money  contributed 
by  the  policyholders.  The  premiums  paid  by  them, 
when  brought  together  form  the  ASSETS  of  the  com- 
pany— a  fund  which  would  be  called  its  CAPITAL  if 
it  were  not  that  in  life  insurance  parlance  the  word 
capital  has  another  meaning. 

The  ASSETS,  roughly  speaking,  consist  of  two  parts ; 
the  reserve  and  the  surplus. 

The  RESERVE  is  the  money  which  the  company  must 
have  to  meet  its  policy  obligations. 

A  competent  actuary  can  calculate  the  amount  of 
this  reserve,  and  if  its  amount  is  adequate,  it  will, 
with  future  interest  and  future  premiums,  prove  suffi- 
cient  to  pay  every  policy  as  it  matures. 


DIVERSITY 

OF 


SECURITY  43 

The  SURPLUS  is  the  money  left  over  after  all  obliga- 
tions have  been  provided  for.  It  is  a  safety  fund 
which  may  be  used  to  repair  injuries  resulting  from 
depreciation  in  the  value  of  investments  or  from  other 
causes.  It  is  also  the  fund  from  which  DIVIDENDS  are 
paid  to  policyholders. 

Having  given  these  definitions  it  is  necessary  to 
qualify  them  in  one  respect.  The  obligations  of  an 
insurance  company  are,  with  few  exceptions,  insur- 
ance obligations;  and  I  have  spoken  of  the  reserve, 
which  measures  the  insurance  liabilities,  as  if  it  rep- 
resented the  total  liabilities  of  the  company.  But 
every  company  has,  in  addition  to  its  insurance  liabil- 
ities, a  few  miscellaneous  obligations  which  must  be 
added  to  the  reserve  to  determine  the  total  liabilities 
of  the  company.  To  be  exact,  therefore,  I  must 
modify  the  foregoing  definitions,  as  follows: 

The  ASSETS  represent  the  total  property  of  the  com- 
pany. 

The  LIABILITIES,  wljich  consist  chiefly  of  the  reserve 
(the  company's  insurance  obligations)  also  include 
all  other  outstanding  liabilities  (which  are  usually 
small  and  unimportant.) 

The  SURPLUS  is  the  difference  between  the  assets 
and  the  total  liabilities. 


CHAPTER    VIII. 
STANDARDS  OF  VALUATION. 

MEANING    OF    A    THREE    PERCENT    RESERVE. 

The  reserve,  as  we  have  seen,  is  the  amount  of 
money  which  the  company  needs,  together  with  future 
interest  and  future  premiums,  to  pay  its  policy  obliga- 
tions. The  total  reserve  is  the  sum  of  the  reserves 
held  against  each  individual  policy. 

If  a  layman  scrutinizes  the  reserves  on  individual 
policies  he  will  be  puzzled.  In  one  case  he  will  see 
that  death  occurs  before  much  reserve  has  been  accu- 
mulated; and  yet  the  company  must  pay  the  full 
amount  of  the  insurance.  In  another  case  he  will 
see  that  the  policy  has  been  in  force  for  a  long  series 
of  years,  and  that  the  reserve  has  reached  an  amount 
possibly  in  excess  of  the  insurance. 

What  is  the  meaning  of  this? 

Simply  that  the  reserve  on  each  policy,  considered 
by  itself,  means  nothing,  notwithstanding  the  fact 
that  the  total  reserve  is  found  by  adding  the  individual 
reserves  together. 

The  important  thing  for  the  company  to  determine 
is  that  the  total  reserve  shall  be  adequate.  Then  the 
result  will  be  satisfactory,  although  in  certain  individ- 
ual cases  the  reserve  will  seem  to  be  inadequate. 

Any  actuary  will  tell  you  how  reserves  are  com- 
puted. Space  is  lacking  for  an  explanation  here. 


STANDARDS  OF  VALUATION  45 

WHY  THE  RESERVE  IS  LESS  THAN  THE  POLICY 
OBLIGATIONS. 

Every  life  insurance  company  issues  a  financial 
statement  at  the  beginning  of  each  year. 

This  statement  reveals  (a)  the  present  condition 
of  the  company,  and  gives  (b)  a  brief  record  of  its 
transactions  for  the  previous  year. 

The  annual  statement  of  a  well  managed  company 
is  therefore  one  of  the  best  canvassing  documents 
that  an  agent  can  have. 

There  is  only  one  thing  in  such  a  statement  that  is 
obscure  to  the  layman  (if  he  has  any  familiarity  with 
financial  balance  sheets)  and  that  is  the  fact  that  the 
total  liabilities,  including  the  total  reserve,  are  less 
than  the  policy  obligations.  The  reason  for  this  is 
that  most  of  these  obligations  are  future  liabilities — 
some  of  them  will  not  mature  for  many  years.  The 
reserve  simply  represents  the  insurance  liability  of 
the  company  at  the  present  time,  and  does  not  include 
the  premiums  and  interest  which  will  be  received  here- 
after, and  which  will  aid  in  paying  the  company's 
obligations.* 

Now,  as  we  have  seen,  the  reserve  is  adequate  be- 
cause the  obligations  of  the  company  mature  grad- 
ually; giving  time  for  interest  and  future  premiums 
to  make  up  the  apparent  deficiency. 

But  the  amount  of  interest  which  will  be  credited 
to  the  reserve  will  depend  upon  the  amount  of  interest 

*The  reserve  is  sometimes  called  the  Re-insurance  Fund,  because  if  the 
company  should  wish  to  transfer  its  obligations  to  another  company  the 
other  company  could  afford  to  assume  all  its  risks,  in  consideration  of 
receiving  its  total  reserve  fund. 


46  THE  SUCCESSFUL  AGENT 

earned,  and  no  company  can  tell  in  advance  precisely 
what  its  earnings  will  be.  Hence  it  is  necessary  that 
the  rate  assumed  shall  not  be  higher  than  the  company 
may  reasonably  expect  to  realize.  At  present  most 
of  the  companies  assume  that  3%  will  thus  be  earned.* 

THREE  PERCENT  STANDARD  HIGHER  THAN  FOUR  PER- 
CENT STANDARD. 

When  the  actuary  of  a  company  computes  the 
reserves  on  the  outstanding  policies,  and  thus  dis- 
covers the  total  reserve  necessary  for  the  company  to 
hold,  he  is  said  to  "value  the  policies"  or  "make  a 
valuation." 

We  often  hear  it  said  that  the  policies  of  a  certain 
company  have  been  issued  on  the  four  percent  stan- 
dard of  valuation,  and  that  some  other  company  em- 
ploys the  higher  three  per  cent,  standard.  This  is 
simple  enough,  but  laymen  are  often  confused  by  the 
statement  that  the  3%  standard  is  higher  than  the  4% 
standard.  They  are  confused  because  they  know 
that  4%  is  a  higher  rate  of  interest  than  3%,  and 
wonder  why  the  standard  is  higher  when  the  lower 
rate  is  employed.  The  explanation  is  simply  that 
if  a  certain  sum  of  money  must  be  paid  in  the  future, 
and  if  that  sum  is  to  be  paid  in  part  from  interest 
earned,  a  larger  sum  must  be  provided  in  the  beginning 
if  only  3%  will  be  earned,  than  if  4%  will  be  earned. 
The  3%  standard  is  consequently  higher  than  the 
4%  standard  because  more  principal  must  be  pro- 

*  Formerly  4%  was  assumed,  and  many  policies  now  outstanding  were 
issued  on  a  4%  basis.     In  the  early  days  still  higher  rates  were  assumed. 


STANDARDS  OF  VALUATION  47 

vided  to  make  up  for  the  expected  deficiency  in  in- 
terest. 

INSURANCE   REPORTS. 

In  addition  to  the  financial  statement,  or  balance 
sheet,  which  the  company  issues  at  the  beginning  of 
each  year  for  the  information  of  its  agents  and  policy- 
holders,  it  must  make  a  detailed  report  to  the  Insur- 
ance Department  of  every  State,  and  to  the  govern- 
ment of  every  foreign  country  within  whose  borders 
it  transacts  business. 

The  agent  will  do  well  to  have  always  at  hand  the 
last  printed  report  of  the  Insurance  Department  of 
his  own  State,  or  of  the  State  within  which  his  com- 
pany is  domiciled;  for  this  report  not  only  embodies 
the  verified  financial  statement  of  his  own  company, 
but  those  of  the  companies  with  which  he  must  com- 
pete. 

In  soliciting  business,  or  in  persuading  a  customer 
not  to  surrender  a  policy,  the  agent  can  often  use  the 
official  report  to  great  advantage  by  pointing  to  the 
figures  illustrating  the  financial  strength  of  his  com- 
pany or  the  economy  of  its  management.  Or,  if  he 
is  dealing  with  a  financial  man,  he  can  call  attention 
to  the  excellent  quality  of  the  investments  of  the 
company. 

INSURANCE   FACTS   AND   FIGURES. 

There  are  many  publications  which  the  agent  can 
turn  to  advantage,  such  as  the  tabulated  abstracts 
of  the  financial  statements  of  all  the  companies; 


48  THE  SUCCESSFUL  AGENT 

general  compilations  of  insurance  statistics;  books 
containing  the  policy  forms  of  the  different  companies  ; 
blue  books,  etc.  etc.* 


*The  following  publications  of  The  Spectator  Company  are  good  illus- 
trations: The  Pocket  Index  (an  annual  abstract  of  financial  statistics) 
The  Handy  Guide  (giving  premiums,  policy  contracts,  etc.,)  and  The 
Insurance  Year  Book. 

For  those  who  wish  to  dip  a  little  more  into  the  mathematics  of  life  insur- 
ance and  the  chief  actuarial  problems  see  Notes  on  Life  Insurance  by  the 
late  Gustavus  W.  Smith;  revised  and  extended  by  E.  B.  Fackler,  also 
published  by  The  Spectator  Company. 


CHAPTER    IX. 
ADEQUATE  PREMIUMS  MUST  BE  CHARGED. 

In  a  previous  chapter  I  have  said  that  every  life 
insurance  company  is  a  co-operative  association,  but 
the  statement  was  made  with  some  hesitation  be- 
cause the  phrase  is  ambiguous  and  likely  to  be  mis- 
understood. This  is  because  there  are  certain  insur- 
ance organizations  which  are  called  "co-operative 
societies"  to  distinguish  them  from  the  old-fashioned 
companies*. 

Since  all  life  insurance  companies  are  co-operative 
associations  it  is  unfortunate  that  this  good  title  has 
been  given  to  a  kind  of  insurance,  and  a  group  of  com- 
panies, that  have  failed  to  furnish  complete,  or  perma- 
nent protection. 

It  is  asserted  by  the  advocates  of  regular  life  insur- 
ance that  these  organizations  have  lacked  stability 
because  they  have  neglected  to  take  due  account  of 
the  law  of  mortality.  Seeing  that  insurance  could 
be  offered,  in  the  beginning,  on  young  lives  at  very 
low  premium  rates,  they  have  ignored  the  fact  that 
when  low  rates  are  thus  charged  very  much  higher 
rates  must  be  charged  later  on. 

They  have  attempted  the  hopeless  task  of  charging 
a  low  rate  with  the  expectation  of  meeting  their  obliga- 

*These  societies  are  also  called  "assessment"  companies — a  less  mis- 
leading title. 


50  THE  SUCCESSFUL  AGENT 

tions  without  any  material  subsequent  increase  in 
their  charges.  As  a  rule,  the  result  has  been  that 
after  flourishing  for  a  time  they  have  deteriorated  or 
failed.  And  when  such  a  company  fails  it  usually 
has  in  its  membership  a  large  number  of  impaired 
risks  (men  who  could  not  obtain  insurance  elsewhere) 
besides  many  unpaid  death  claims  in  favor  of  widows 
and  orphans. 

These  co-operative  (or  assessment)  companies  were 
very  popular  at  one  time.  Their  charges  were  so 
moderate  that  the  regular  companies  found  their 
Competition  annoying,  but  nowadays  it  is  easy  to 
convince  the  public  that  if  there  is  any  branch  of 
business  which  needs  to  be  founded  on  accurate 
scientific  principles  it  is  the  business  of  life  insurance. 
3ome  one  has  said  that  no  one  wants  a  tolerably  good 
egg;  and  all  thoughtful  men  will  agree  that  no  man 
of  common  sense  should  content  himself  with  tolerably 
good  life  insurance,  since  its  province  is  to  protect 
widows,  orphans,  and  those  who  are  unable  to  protect 
themselves. 

If  these  companies  had  been  organized  on  the 
natural  basis,  so  as  to  charge  a  premium  increasing 
from  year  to  year,  or  at  short  intervals,  they  would 
have  escaped  the  chief  difficulties  which  have  beset 
them.  This  they  failed  to  do,  however,  either  because 
they  overlooked  the  fact  that  mortality  increases  as 
the  risks  on  the  books  of  a  company  grow  older,  or 
because  they  saw  that  they  could  not  compete  success- 
fully with  the  regular  companies  unless  they  offered 
their  insurance  at  cut  rates. 


ADEQUATE  PREMIUMS  MUST  BE  CHARGED        51 

Every  risk  assumed  by  a  company  costs  money. 
The  company  must  be  remunerated  for  that  cost  or 
it  will  suffer  a  loss.  The  effort  to  grant  insurance 
(except  temporarily)  at  less  than  cost  will  always  be 
futile. 

The  best  way  to  point  out  the  weakness  of  assess- 
ment insurance  is  to  show  that  adequate  insurance  can 
be  issued  on  the  natural  basis. 

The  form  of  policy  which  best  illustrates  the  natural 
basis  is  called  the  Yearly  Renewable  Term  Policy. 
Under  this  policy  the  exact  cost  of  the  insurance  from 
year  to  year  (as  shown  by  the  mortality  table)  less 
interest  and  plus  a  loading  for  expenses,  is  charged. 
But  the  premium  necessarily  increases  from  year  to 
year ;  and  although  it  is  very  small  in  the  beginning  it 
becomes  very  heavy  later  on.* 

There  are  other  varieties  of  renewable  term  insur- 
ance which  have  a  thoroughly  scientific  basis.  A 
level  premium  is  charged  for  a  short  term,  such  as 
three  or  five  years,  and  is  then  increased  for  another 
term.  But  the  principle  is  the  same;  if  the  premium 
is  low  at  first  it  must  be  increased  as  the  policy  grows 
older. 

Some  companies  organized  on  the  assessment  plan 
have  reorganized  their  business  so  as  to  conduct  it 
on  the  regular  basis.  But  the  agents  of  the  regular 
companies  need  not  fear  the  competition  of  such 
organizations,  because  even  after  they  have  reformed 
their  methods,  they  are  usually  handicapped  by  out- 

*For  a  description  of  this  policy  and  the  rates  charged  see  pages  76,  77,  78. 


52  THE  SUCCESSFUL  AGENT 

standing  obligations  previously  assumed  on  an  insecure 
basis. 

Before  turning  from  this  subject  it  may  not  be  amiss 
to  add  that  in  buying  life  insurance  the  purchaser 
must  not  only  consider  quality  but  quantity. 

If  a  dealer  offers  a  ton  of  coal  at  less  than  the  current 
price,  see  that  you  get  full  measure.  When  a 
regular  company  issues  a  policy  for  $1,000,  it 
guarantees  the  payment  of  $1,000  at  maturity.  With 
many  assessment  companies,  however,  it  has  been 
the  usage  to  insert  a  clause  stipulating  that  the  amount 
of  insurance  provided  for  in  the  policy  (or  certificate) 
shall  be  paid  in  full  only  in  case  it  turns  out  that  the 
company  has  received  adequate  remuneration  for 
the  risk  assumed. 

ECONOMY  AND  PROFIT. 

If  the  agent  is  to  succeed ,  his  customer  must  have 
confidence  in  life  insurance  in  general.  He  must  be 
shown,  of  course,  that  the  particular  company  rep- 
resented by  the  agent  is  the  one  of  all  others  which 
he  ought  to  patronize.  But  this  is  not  to  be  accom- 
plished by  assailing  competing  companies. 

The  agent  who  seeks  to  recommend  his  company 
by  shaking  the  faith  of  his  customer  in  other  com- 
panies organized  on  a  sound  basis,  will  shake  his  con- 
fidence in  all  companies.  Such  an  agent  follows,  not 
simply  a  shortsighted,  but  a  suicidal  method. 

Nevertheless,  the  agent  must  study  his  own  com- 
pany, and  be  prepared  to  advance  its  strong  points 
with  convincing  force. 


ADEQUATE  PREMIUMS  MUST  BE  CHARGED        53 

If  his  company  has  been  well  managed  in  the  past, 
and  is  skillfully  managed  today,  he  will  be  able  to 
point  to  its  financial  strength.  He  will  be  able  to 
point  to  good  investments,  and  appreciation  in  the 
value  of  assets.  He  will  be  able  to  point  to  judicious 
economy;  and,  if  expenditures  have  been  large,  he 
will  be  able  to  show  that  they  have  been  justified 
by  adequate  returns.  He  will  be  able  to  show  that 
the  business  transacted  has  not  cost  the  company  an 
excessive  price,  and  that  the  expense  ratios  indicate 
profit  and  not  loss.  He  will  be  able  to  show  that  the 
company's  risks  have  been  selected  with  such  care 
and  discrimination  that  the  average  death  rate  is 
more  favorable  than  that  provided  for  in  the  mor- 
tality table.  If,  in  addition  to  this,  the  income 
realized  on  investments  is  above  the  rate  assumed  in 
the  computation  of  the  company's  premiums;  and 
if  the  actual  expenses  are  on  the  average  less  than 
the  loadings  on  premiums,  he  will  be  able  to  show 
that  policyholders  will  not  only  be  amply  protected 
but  that  they  may  expect  to  receive  liberal  dividends 
from  future  earnings. 


C~H  A  P  T  E  R    X . 

DIVIDENDS. 

Dividends  are  paid  from  surplus,  and  when  the 
life  insurance  business  is  conducted  on  the  mutual 
plan,  the  theory  is  that  the  policy-holders  get  their 
insurance  approximately  at  cost;  that  having  paid 
premiums  which  are  more  than  sufficient  the  com- 
pany (after  it  has  paid  all  expenses  and  after  reserv- 
ing an  adequate  safety-fund)  can  return  the  balance 
to  the  policyholders. 

From  this  it  will  be  seen  that  the  dividend  on  an 
insurance  policy  has  in  it  a  larger  element  of  saving 
than  of  profit.  Hence,  the  phrase  ' 'return  premium," 
which  is  sometimes  used,  is  more  accurately  descrip- 
tive than  the  somewhat  misleading  term  "dividend." 

HOW   DIVIDENDS    ARE   PAID. 

The  business  of  life  insurance  was  first  organized 
on  a  scientific  basis  in  England,  a  century  and  a 
half  ago. 

In  the  early  days,  dividends  were  paid  at  irregular 
intervals.  A  company  after  accumulating  surplus 
for  a  series  of  years  would  declare  a  dividend,  after 
which  it  would  again  accumulate  surplus  for  a  longer 
or  shorter  period  before  declaring  another  dividend. 

Subsequently  the  English  companies  began  to  de- 
clare dividends  at  fixed  intervals,  usually  five  years. 


DIVIDENDS  55 

The  American  companies  followed  this  English 
custom  for  a  time  and  then  introduced  the  practice 
of  paying  dividends  annually. 

Subsequently  deferred  dividend  policies  became 
very  popular.  Under  that  plan  the  gross  premiun^ 
must  be  paid  for  a  stipulated  period  (usually  either 
ten,  fifteen  or  twenty  years)  after  which  the  surplus 
accumulated  during  the  period  is  divided  among  the 
surviving  policyholders.  Policies  of  this  character, 
if  kept  in  force  after  the  completion  of  the  period, 
usually  receive  dividends  annually  thereafter.* 

There  are  fashions  in  life  insurance  just  as  there 
are  fashions  in  hats  and  coats;  and  although  most 
of  the  policies  now  outstanding  in  the  United  States 
are  on  the  deferred  dividend  plan,  the  fashion  of 
paying  dividends  annually  is  regaining  the  popularity 
which  it  enjoyed  thirty  or  forty  years  ago. 

But  the  manner  in  which  dividends  shall  be  paid 
is  of  secondary  importance.  The  question  of  first 
importance  is  far  broader;  namely,  whether  the 
company  is  so  managed  as  to  enable  it  to  pay  adequate 
dividends  on  any  basis, 

AS    TO    THE    DIFFERENT    WAYS    OF    USING    DIVIDENDS. 

When  dividends  are  paid  annually,  the  first  divi- 
dend usually  falls  due  at  the  end  of  the  first  year, 
when  the  premium  for  the  second  year  is  payable. 

Some  companies  do  not  begin  to  pay  annual  divi- 
dends until  the  end  of  the  second  year. 

*  Defer  red -dividend  insurance  is  explained  in  Appendix  G,    Page  196. 


56  THE  SUCCESSFUL  AGENT 

A  dividend  may  be  used  in  any  one  of  four  ways: 

(1)  As  so  much  cash  to  be  withdrawn ;  or, 

(2)  As  cash  to  reduce  the  premium ;  or, 

(3)  As  cash  to  buy  paid  up  insurance;*   or, 

(4)  As  cash  to  buy  an  annuity  on  the  life  of  the 
insured. 

Every  agent  should  be  able  to  explain  these 
different  methods  to  his  customer,  who  often  wonders 
why  the  amount  of  a  dividend  addition  is  larger 
than  the  equivalent  cash  dividend;  or  why  the 
addition  is  smaller  in  amount  than  if  the  cash  divi- 
dend were  used  as  an  annual  premium  to  buy  new 
insurance.  The  explanation  in  the  latter  case  is 
that  the  addition  is,  so  to  speak,  a  small  single- 
premium  policy.  The  same  amount  of  cash  used 
as  an  annual  premium  would,  of  course,  buy  a  larger 
amount  of  insurance.  But  to  keep  the  insurance 
in  force,  another  payment,  for  the  same  amount, 
would  have  to  be  made  a  year  later,  and  further  pay- 
ments during  subsequent  years. 

THREE  WAYS  OF   CONDUCTING  THE 
BUSINESS. 

The  regular  life  insurance  companies  may  be 
broadly  divided  into  three  classes. 

1.  MUTUAL  COMPANIES. 

Governed    by    the    policyholders    through    a 

*When  the  dividend  is  utilized  in  this  way  it  is  usually  called  an  addition, 
because  it  adds  something  to  the  amount  of  the  original  insurance.  This 
is  equivalent  to  the  purchase  of  a  small  single  premium  policy. 


DIVIDENDS  57 

board  of  directors  who  select  officers  to  run 
the  business. 

No  capital,  over  and  above  the  assets  con- 
tributed by  policyholders. 

Transact  their  business  on  the  Participating 
Plan. 

Surplus  belongs  to  policyholders,  and  goes  to 
them  in  dividends. 

2.  PROPRIETARY  (OR  STOCK)  COMPANIES. 

Governed  by  stockholders  through  a  board  of 
directors  who  select  officers  to  run  the  business. 

Capital  stock  (usually  for  a  large  amount)  in 
addition  to  the  assets. 

Transact  their  business  on  the  Non-Participat- 
ing Plan. 

Policyholders  pay  a  fixed  premium  (less  than 
the  charge  for  participating  policies). 

Policyholders  have  no  interest  in  the  surplus 
earned,  aside  from  the  protection  which  it  gives 
to  the  company. 

Dividends  from  surplus  to  stockholders  only. 

3.  MIXED  COMPANIES.       (A  compromise  between  mu- 

tual and  stock  companies.) 

Governed  by  stockholders  through  a  board  of 
directors  who  select  officers  to  run  the  business. 

Capital  stock  in  addition  to  assets. 

Premiums  computed  on  the  participating 
basis. 

Dividends  from  surplus  to  policyholders,   as 


58  THE  SUCCESSFUL  AGENT 

in  the  case  of  mutual  companies.  But  part  of 
the  surplus — usually  a  moderate  percentage — 
paid  in  dividends  to  stockholders. 

Exception  1.  It  has  been  the  custom  with  both  mu- 
tual and  mixed  companies  to  issue  non-participating 
policies  to  customers  who  fancy  that  kind  of  insur- 
ance.* 

Nor  has  it  been  unusual  for  stock  companies  to  issue 
participating  policies  occasionally. 

Exception  2.  Some  companies,  that  are  practically 
mutual  companies,  are,  in  a  certain  technical  sense, 
mixed  corporations.  For  example:  there  are  com- 
panies whose  business  is  conducted  on  the  mutual  plan 
— whose  surplus  is  distributed  exclusively  among 
policyholders — that  nevertheless,  have  a  nominal  capi- 
tal (usually  amounting  to  $100,000.) 

Such  a  company  is  a  mutual  organization  as  far  as 
its  insurance  business  is  concerned.  As  far  as  the 
government  of  the  corporation  is  concerned,  it  may 
either  be  controlled  by  the  stockholders  exclusively ;  or 
by  stockholders  and  policyholders  jointly,  or  by  the 
policyholders  exclusively."}* 


"•Companies  acting  under  the  New  York  law  have  since  January  1, 1907, 
been  limited  to  one  plan,  either  the  participating  or  the  non-participating 
method. 

fin  the  State  of  New  York  an  amendment  to  the  Insurance  Law  was 
passed  in  1853  which  has  forced  every  mutual  company  subsequently  organ- 
ized, to  have  a  capital  of  at  least  $100,000  before  opening  its  doors.  The 
object  of  this  law  was  not  to  prevent  the  establishment  of  mutual  com- 
panies, but  to  prevent  the  organization  of  a  company  on  any  basis  by 
irresponsible  persons.  Its  aim  was  also  to  protect  the  policyholders  of  a 
young  company  during  the  infancy  of  the  enterprise. 


BOOK  II 


DESCRIPTION  OF  THE  WARES  THE  AGENT 
HAS  TO  SELL. 


AS   LIFE   INSURANCE    HAS   A  VARIETY  OF  USES  AND  AC- 
COMPLISHES MANY  USEFUL  PURPOSES,  THERE  MUST 
BE    A    VARIETY    OF    POLICY    FORMS. 


INTRODUCTION  TO  BOOK  II. 


The  agent  is  a  salesman,  and  must  be  thoroughly  fa- 
miliar with  the  wares  he  has  to  offer. 

Life  insurance  serves  many  useful  purposes.  To  this 
end  there  are  many  kinds  of  policies.  And  the  agent 
must  know  the  characteristics  of  each,  and  how  each 
contract  may  be  adapted  to  the  needs  of  his  customers. 
Hence  the  different  kinds  of  insurance  must  be  clearly 
understood,  and  each  form  of  policy  analyzed  and  ex- 
plained. 

The  varyingneeds  of  different  people  must  be  recognized, 
and  the  manner  in  which  their  wants  may  be  supplied 
must  be  understood  by  every  agent  who  hopes  to  achieve 
conspicuous  success. 


BOOK   II. 


CHAPTER    I. 
THE  POLICY  CONTRACT. 

THE  AGENT'S  RELATION  TO  THE  CONTRACT. 

The  agent,  like  a  banker  who  sells  a  block  of  bonds 
to  his  customer,  exercises  very  important  functions, 
but  he  is  not  a  party  to  the  contract. 

He  occupies  a  delicate  position,  for  he  is  employed 
by  the  company  to  sell  its  policies,  and  also  represents 
the  purchaser,  and  must  be  true  to  both. 

He  is  like  an  ambassador,  who  represents  his  nation 
at  the  court  of  some  friendly  power. 

His  legal  status  can  be  readily  determined,  but  he 
need  have  little  concern  about  that  if  he  is  careful 
about  his  moral  status. 

There  is  no  real  difficulty  in  being  loyal  to  your  com- 
pany and,  at  the  same  time,  the  friend  and  adviser  of 
your  customer;  for  in  a  properly  organized  company 
the  interests  of  the  company,  the  agent,  and  the  policy- 
holder  are  identical.  It  is  to  the  interest  both  of  the 
company  and  the  agent  to  give  the  customers  the  kind 
of  insurance  which  will  suit  them  best.  It  is  to  the  in- 
terest of  the  agent  as  well  as  of  the  company  only  to 
insure  men  who  are  good  risks.  And  honest  policy- 


64  THE  SUCCESSFUL  AGENT 

holders  will  be  benefitted  if  the  business  of  the  com- 
pany is  carefully  selected;  for  if  mortality  is  light 
policyholders  will  receive  larger  dividends,  or  if  the 
policies  are  issued  on  the  non-participating  plan  the 
prosperity  of  the  company  will  enhance  the  security  of 
their  investments  in  it. 

Formerly,  every  life  insurance  contract  consisted  of 
three  parts  (1)  the  application,  executed  by  the  in- 
sured ;  (2)  the  report  of  the  medical  examiner,  embody- 
ing answers  made  by  the  insured  to  questions  put  by 
the  doctor ;  and  (3)  the  policy,  executed  by  two  execu- 
tive officers  of  the  company. 

The  modern  usage  is  to  make  the  application  and 
medical  report  collateral  documents,  furnishing  the 
basis,  but  not  forming  any  part  of  the  contract.  In 
such  a  case  the  policy  itself  becomes  the  complete  con- 
tract ;  the  company  agreeing  to  insure  the  applicant  in 
consideration  of  the  first  premium,  and  his  promise  to 
pay  subsequent  premiums  as  they  fall  due. 

THE    APPLICATION. 

Let  us  glance  for  a  moment  at  the  history  of  such  a 
contract.  The  man  who  decides  to  apply  for  insur- 
ance is  the  Applicant  as  soon  as  he  has  signed  his  name 
to  the  proposal  blank.  When  he  has  paid  the  first 
premium  he  becomes  the  Insured. 

CONDITIONAL   RECEIPT. 

The  medical  examination  may  be  made  either  before 
or  after  the  signing  of  the  application.  And  if  the 
agent  believes  that  the  result  of  the  examination  has 


THE  POLICY  CONTRACT  65 

been,  or  will  be,  satisfactory,  he  will  do  well  to  clinch 
the  transaction  by  collecting  at  once  from  the  appli- 
cant the  first  premium,  giving  him  in  return  what  is 
called  a  conditional  receipt.  This  receipt  provides 
that  the  insurance  shall  take  effect  immediately  (sub- 
ject to  the  acceptance  of  the  risk  by  the  company.) 

STRIKE   WHILE   THE   IRON  IS  HOT. 

It  is  important  for  the  applicant  to  protect  himself 
against  accident  or  delay  by  securing  the  protection 
of  the  insurance  at  once. 

It  is  important  for  the  agent  also  that  the  contract 
should  be  consummated  at  once ;  and  that  for  several 
reasons.  The  applicant  will  not  be  able  thereafter  to 
change  his  mind.  Time  will  be  saved.  A  second 
visit  to  the  applicant  will  be  avoided,  for  the  policy 
when  issued  may  be  sent  by  a  messenger  or  by  mail. 

The  agent  who  neglects  to  collect  the  premium  at 
once  may  have  to  do  all  his  work  over  again. 

A  bird  in  the  hand  is  worth  two  in  the  bush ;  and  the 
agent's  commission  is  in  the  air  until  the  premium  has 
been  paid. 

THE   MEDICAL   EXAMINATION. 

Many  men  hesitate  to  insure  because  they  dread  the 
examination,  which  they  erroneously  magnify  into  an 
inquisition,  or  at  least  a  somewhat  painful  ordeal. 
But  the  object  of  the  doctor  is  not  to  discover  ideally 
perfect  specimens  of  manhood,  or  to  torture  applicants 
in  any  way.  The  aim  is  simply  to  protect  the  mass  of 


66  THE  SUCCESSFUL  AGENT 

the  policyholders  of  the  company  against  fraud, 
and  to  keep  out  those  who  are  obviously  impaired 
risks. 

The  layman  often  asks  why  a  medical  examination 
is  necessary.  Why,  if  deaths  occur  on  the  average  in 
accordance  with  known  laws,  a  company  cannot  afford 
to  insure  everybody. 

So  it  could,  if  the  law  compelled  every  man  to  insure. 
A  company  could  well  afford  to  grant  insurance  at 
current  rates  to  the  community  at  large,  but  the  med- 
ical examination  is  necessary  under  existing  conditions 
because  the  company  can  insure  only  those  who  are 
willing  to  be  insured,  and  there  is  always  a  tendency 
towards  what  is  known  as  "adverse  selection.'1  Any 
company  if  it  offered  to  insure  every  man  who  applied 
would  soon  fail,  for  invalids  would  apply  and  healthy 
people  would  hold  back.  Its  death  rate,  instead  of 
being  normal,  and  in  accordance  with  general  aver- 
ages, would  become  excessive. 

DELIVERY   OF   THE   POLICY. 

If  the  company  approves  the  risk,  the  policy  is 
"written"  and  sent  to  the  agent  for  delivery. 

If  the  policy  is  issued  on  the  level  premium  basis, 
and  is  an  "ordinary  life"  contract,  it  will  provide  that, 
in  consideration  of  the  payment  of  a  uniform  rate  an- 
nually for  life,  the  company  will  pay  to  any  designated 
beneficiary  the  amount  of  the  face  of  the  policy  upon 
the  death  of  the  insured,  on  receipt  of  due  evidence  of 
his  death. 


THE  POLICY  CONTRACT  67 

PROOFS   OF   DEATH. 

This  evidence  is  given  to  the  company  in  a  series  of 
certificates  which  taken  together,  are  popularly  known 
as  proofs  of  death. 

The  agent  must  always  be  ready  to  aid,  without 
charge,  in  facilitating  the  payment  of  a  death  claim; 
for  the  check  of  the  company,  in  satisfaction  of  a  pol- 
icy, delivered  by  the  agent  to  the  beneficiary,  is  one 
of  the  most  powerful  levers  he  can  get  hold  of  to  in- 
crease his  business. 

THE   BENEFICIARY. 

The  beneficiary  is  the  person  to  whom,  according  to 
the  contract,  the  insurance  is  to  be  paid.  In  modern 
contracts  the  insured  usually  reserves  the  right  to 
change  the  beneficiary  at  any  time.  But  the  benefici- 
ary may  be  made  the  absolute  owner  of  the  policy,  or 
the  insured  may  have  the  policy  drawn  in  his  own 
favor,  and  may  then  assign  it  at  any  time,  or  dispose 
of  it  by  will. 

PRIVILEGES   AND   CONDITIONS. 

A  life  insurance  contract  might  be  a  very  short  in- 
strument, simply  providing  for  the  payment  of  prem- 
iums by  the  insured,  and  for  the  payment  of  the  insur- 
ance by  the  company.  But  certain  reasonable  con- 
ditions are  added  for  the  protection  of  the  policy- 
holders  of  the  company  in  general,  and  certain  pro- 
visions are  prescribed  by  law.  These  conditions  in  a 
modern  policy,  however,  are  few.  The  greater  part  of 
the  contract  consists  of  privileges,  benefits,  and  op- 


68  THE  SUCCESSFUL  AGENT 

tions.  These  are  advantages  which  help  the  agent  to 
sell  the  policy,  and  which  the  insured  would  not  as  a 
rule  be  willing  to  relinquish.  If  these  were  all  omitted 
the  contract  would  be  much  shorter  and  simpler. 

Without  going  into  detail,  some  of  these  benefits  are 
as  follows: 

1.  Incontestability'  As  soon  as  the  policy  has  been 
in  force  for  a  stipulated  period,  the  company  volun- 
tarily estops  itself  from  contesting  the  payment  of  the 
insurance. 

2.  Grace.  Thirty  days  grace  is  allowed  in  the  pay- 
ment of  premiums.     (Interest  is  usually  charged  for 
the  time  the  payment  is  deferred.) 

3.  Loans.  After  the  policy  has  reached  a  certain  age 
the  company  will  make  a  loan  against  it  for  a  specified 
amount. 

4.  Surrender  Values.  The  contract  may  be  termin- 
ated   and  a  surrender  value  granted,  after  the   con- 
tract has  been  in  force  for  a  certain  length  of  time. 

PREMIUM   NOTICES. 

The  company  is  compelled  by  law  to  send  due  notice 
of  every  premium  falling  due,  to  the  insured  or  as- 
signee. But  the  agent  must  keep  a  record  of  all  poli- 
cies in  which  he  is  interested,  and  see  to  it  that  no  prem- 
ium is  overlooked. 

RESTORATION. 

The  company  is  always  ready  to  make  it  as  easy  as 
possible  for  the  man  who  has  permitted  his  policy  to 
lapse  to  revive  it,  if  he  is  still  a  good  risk. 


THE  POLICY  CONTRACT  69 

The  agent  will  always  find  it  to  his  advantage  to  aid 
in  effecting  the  restoration  of  a  policy,  but  he  will  save 
himself  much  trouble,  and  protect  his  client  against 
every  danger,  by  preventing  a  lapse  in  the  first  instance. 

There  are  critical  periods  in  the  history  of  every 
policy.  When  the  second  premium  falls  due  the  agent 
should  be  at  hand  to  give  his  customer  a  few  reassuring 
arguments,  if  his  steadfastness  has  become  shaken. 
He  should  watch  out  also  to  prevent  the  agent  of  an- 
other company  from  making  some  plausible  counter- 
proposition  which  might  unsettle  his  customer. 

He  must  be  on  the  alert  at  the  end  of  the  third  year. 
Most  companies  refuse  to  allow  any  surrender  value 
until  the  end  of  the  third  year.  At  that  time  the  very 
fact  that  a  surrender  value  can  be  obtained  for  the 
first  time  tempts  a  man  to  abandon  his  policy,  espe- 
cially if  the  agent  of  some  other  company  explains  to 
him  that  the  value  can  be  used  to  pay  the  premium  on 
a  new  policy. 

When  a  man  expresses  a  determination  to  surrender 
his  policy  for  its  cash  value  at  the  end  of  the  third  year , 
call  his  attention  to  the  fact  that  the  longer  the  policy 
remains  in  force  the  larger  will  the  surrender  value  be. 
Any  sensible  man  who  can  afford  to  pay  his  premium 
can  be  induced  to  continue,  if  he  is  shown  that  the 
longer  he  waits  the  larger  will  be  the  return  which  he 
can  demand. 

UTILIZE   MATURING   POLICIES. 

Keep  your  records  so  that  you  will  know  well  in  ad- 
vance when  every  limited  payment  life  policy  will  be- 


70  THE  SUCCESSFUL  AGENT 

come  "paid  up, "  and  when  every  endowment  will  ma- 
ture. If  a  man  has  a  fifteen  payment  life  policy  you 
can  go  to  him  at  some  convenient  time  after  he  has 
paid  the  last  premium,  and  remind  him  that  as  his  old 
policy  will  cost  him  nothing  in  the  future  he  can  well 
afford  to  pay  the  premium  on  an  additional  policy. 
When  an  endowment  policy  matures  it  is  not  only  a 
good  time  to  reinsure  the  owner ,  but  the  very  fact  that 
you  are  paying  a  large  sum  of  money  to  a  living  policy- 
holder  will  enable  you  to  persuade  others  in  the  com- 
munity to  make  similar  investments. 

The  moment  death  comes  to  one  of  your  policy- 
holders  ask  your  company  to  examine  its  records  so  as 
to  be  in  readiness  to  pay  the  claim  as  soon  as  the  proofs 
of  death  are  filed. 

If  the  case  is  one  where  there  are  no  complications 
you  can  easily  gain  access  to  the  executor  of  the  estate, 
or  the  relative  who  represents  the  deceased  policy- 
holder,  and  explain  that  it  will  give  you  pleasure  to 
facilitate  the  settlement  of  the  claim  as  soon  as  possible 
because  you  know  from  experience  that  a  little  ready 
money  at  such  a  time  removes  anxiety  and  prevents 
discomfort.  Then,  when  the  company's  check  arrives, 
you  can  show  it  to  the  people  you  chance  to  meet 
while  it  is  still  in  your  possession* 


CHAPTER    II. 

DIFFERENT  POLICIES  ARE  OF  EQUAL  VALUE. 

POLICY   CONTRACTS   DESCRIBED. 

Theoretically,  one  policy  is  as  good  as  another,  if  due 
allowance  is  made  for  differences  in  premium  rates. 

There  are  different  kinds  of  policies  because  there 
are  different  kinds  of  people.  One  policy  is  better 
than  another  in  a  given  case,  because  it  happens  to 
meet  exactly  the  needs  of  a  particular  man. 

If  a  man  should  ask  you  to  advise  him  whether  to 
buy  an  automobile  or  a  motor  boat,  your  natural  in- 
quiry would  be,  '  '  Do  you  wish  to  travel  by  land  or  by 
water  ? "  Thus  it  is  with  insurance ;  the  best  policy  is 
the  one  that  effects  the  purpose  for  which  it  is  desired. 

POLICIES  MAY  BE  SEPARATED  INTO  FOUR  CLASSES. 

Life  insurance  may  be  broadly  classified  as  follows : 

1.  Ordinary  life  policies. 

2.  Limited  payment  life  policies. 

3.  Endowment  policies. 

4.  Miscellaneous,  or  eccentric,  contracts. 
There  are  few  policies  issued  which  do  not  fall  within 

one  of  the  first  three  of  these  categories. 


72  THE  SUCCESSFUL  AGENT 

THE    ORDINARY    LIFE    POLICY. 

Thus  far  we  have  confined  our  attention  to  ordinary 
life  policies,  and  the  explanations  already  made  suffi- 
ciently describe  that  form.* 

THE    LIMITED   PAYMENT   LIFE   POLICY. 

The  essential  difference  between  the  ordinary  life 
policy  and  the  limited  payment  life  policy  is  this: 
Under  the  former  contract  premiums  must  be  paid 
from  year  to  year  as  long  as  life  continues.  Under  the 
latter  contract  it  is  agreed  (in  consideration  of  the  fact 
that  the  insured  must  pay  a  larger  premium)  that  after 
a  given  number  of  premiums  have  been  paid  the  policy 
will  become  "paid  up." 

The  most  popular  form  of  limited  payment  policy 
is  one  under  which  the  premiums  are  limited  to  a 
period  of  twenty  years.  This  is  called  a  Twenty  An- 
nual Payment  Policy. 

Policies  are  sometimes  issued  with  the  premium 
term  limited  to  fifteen  years,  or  even  ten  years.  But, 
except  for  old  men,  the  higher  charge  for  short  term 
policies  renders  such  contracts  less  popular.  In  the 
case  of  a  limited  payment  policy  the  shorter  the  prem- 
ium term  the  higher  the  rate. 

The  premiums  charged  on  a  limited  payment  policy 
are  equivalent  to  the  premiums  charged  on  an 
ordinary  life  policy.  That  is  to  say,  the  eompensa- 

*The  word  "ordinary"  is  used  to  distinguish  policies  of  this  kind  from 
what  are  called  "limited  payment"  life  policies. 

The  word  "life"  is  used  to  indicate  that  the  contract  is  not  an  "endow- 
ment"— that  the  policy  is  expected  to  continue  during  the  lifetime  of  the 
insured,  and  cannot  be  paid  until  after  his  death. 


DIFFERENT  POLICIES  ARE  OF  EQUAL  VALUE       73 

tion  which  the  company  will  receive  will  correspond 
on  the  average. 

The  correct  premium  to  charge  on  a  limited  pay- 
ment policy  is  derived  from  the  single  premium,  but 
instead  of  computing  a  rate  for  life,  a  series  of  annui- 
ties, limited  to  the  desired  period,  are  calculated.  For 
example :  If  a  policy  is  to  be  paid  for  in  ten  premiums, 
an  annuity  for  ten  years  must  be  computed. 

The  method  of  finding  level  annual  premiums  from 
the  single  premium  having  been  explained,  it  is  not 
necessary  to  illustrate  the  method  further. 

THE  ENDOWMENT  POLICY. 

We  have  seen  that  the  rate  charged  for  a  limited 
payment  life  policy  is  higher  than  for  an  ordinary  life 
policy.  .  Now  the  rate  charged  for  an  endowment  pol- 
icy is  still  higher ;  for  in  the  case  of  an  endowment  the 
insurance  must  be  paid  (1)  in  the  event  of  the  death  of 
the  insured  during  the  endowment  period,  or  (2)  at 
the  end  of  the  period  if  death  does  not  intervene  pre- 
viously. 

Endowment  policies  may  be  issued  for  any  desired 
term  of  years,  but  the  term  is  seldom  less  than  for  ten, 
or  more  than  for  thirty  years ;  the  favorite  period  being 
for  twenty  years. 

An  endowment  policy  is  an  excellent  contract  for  a 
young  man  who  wishes  to  save  something  from  year  to 
year,  in  addition  to  securing  the  protection  furnished 
by  the  insurance. 

It  is  a  good  policy  for  a  father  who  has  an  infant  son 
or  daughter,  and  who  wishes  to  start  the  son  in  busi- 


74  THE  SUCCESSFUL  AGENT 

ness  when  he  comes  of  age,  or  to  give  the  daughter  a 
marriage  portion.  He  may  accomplish  this  easily  and 
conveniently  by  means  of  an  endowment  policy,  if  he 
lives.  Meanwhile,  in  the  event  of  his  death,  the  insur- 
ance will  give  instant  protection  to  the  beneficiary. 

The  endowment  policy  is  a  compound  contract ;  that 
is  to  say,  it  consists  of  two  simple  contracts  in  com- 
bination. One  of  these  is  known  as  a  pure  endowment, 
the  other  is  a  term  policy* 

THE  PURE  ENDOWMENT. 

The  pure  endowment  is  a  contract  under  which  the 
company  agrees  (in  consideration  of  a  single  payment, 
or  of  a  series  of  level  premiums)  to  pay  an  agreed  sum 
at  the  end  of  a  designated  term  of  years  if  the  person 
on  whose  life  the  contract  depends  is  living  at  the  end 
of  the  term.  In  the  event  of  death  during  the  term 
the  company  pays  nothing. 

For  example:  In  consideration  of  a  gross  annual 
premium  of  $37.20,  the  company  will  agree  to  pay  a 
man  30  years  of  age,  $1,000  at  the  end  of  twenty  years, 
when  he  will  reach  the  age  of  50,  on  condition  that  the 
company  shall  make  no  return  if  he  dies  before  reach- 
ing the  age  of  50.f 

*The  method  of  discovering  the  current  premium  on  these  two  policies 
and  on  the  endowment  policy  also,  will  be  found  in  Appendix  C,  page  178. 

tA  child's  endowment  is  a  species  of  pure  endowment.  It  is  utilized  by 
&  parent  who  wishes  to  make  future  provision  for  a  son  or  daughter. 

A  father,  for  example,  who  has  a  daughter  one  year  old  can,  for  a  gross 
annual  premium  of  $36.79,  provide  a  fund  of  $1,000,  payable  when  the 
daughter  comes  of  age.  In  view  of  the  moderate  price  charged  for  such 
an  endowment  the  father  can  afford  to  run  the  risk  of  losing  all  the  money 
invested  in  the  event  of  the  death  of  the  daughter;  for  if  death  intervenes 
the  fund  will  not  be  required,  and  if  death  does  not  intervene  the  return 
will  be  liberal  and  useful. 


DIFFERENT  POLICIES  ARE  OF  EQUAL  VALUE       75 

THE  TERM  POUCY. 

The  term  policy  is  a  temporary  policy.  It  is  the 
converse  of  a  pure  endowment.  It  grants  protection 
for  a  term  of  years  and  then  expires. 

The  company  can  afford  to  insure  a  man  35  years  old 
for  $1,000  for  a  term  of  ten  years  at  a  gross  annual 
premium  of  $16.45,  for  if  death  does  not  intervene 
before  the  end  of  the  ten  years  the  company's  obliga- 
tion will  then  be  cancelled.  A  term  policy  is  like  a 
fire  policy.  If  death  occurs  after  the  policy  has  run 
out  (unless  the  insurance  has  been  renewed)  the  com- 
pany will  have  nothing  to  pay. 

THE   NON-PARTICIPATING   POLICY. 

Companies  that  transact  their  business  on  the  par- 
ticipating plan  charge  premiums  somewhat  larger  than 
are  believed  to  be  necessary,  with  the  understanding 
that  the  excess  shall  be  returned  in  dividends. 

But  as  no  one  can  tell  in  advance  what  the  amount 
of  future  savings  or  earnings  will  be,  no  policyholder 
can  tell  in  advance  exactly  what  a  participating  policy 
will  cost.  Hence,  some  people  prefer  to  relinquish  all 
claim  to  dividends  and  to  pay  a  fixed  rate,  somewhat 
less  than  the  premium  charged  on  the  participating 
plan.* 

Some  companies  make  a  specialty  of  this  kind  of  in- 
surance, and  when  this  is  the  case  the  company  usually 

*The  non-participating  rate  has  the  same  basis  as  the  participating  rate, 
the  only  difference  being  that  the  loading  is  less.  In  other  words,  the  net 
premium  is  the  same.  The  gross  premium  is  less  because  the  percentage 
added  for  expenses  is  less. 


76  THE  SUCCESSFUL  AGENT 

has,  in  addition  to  its  assets,  a  large  capital,  held  for 
the  protection  of  policyholders.  If  the  premiums 
charged  prove  inadequate  then  the  deficiency  must 
be  made  up  out  of  this  capital.  If,  on  the  other 
hand,  the  premiums  charged  are  more  than  adequate, 
the  surplus  goes  in  dividends  to  the  stockholders  as  a 
reward  for  risking  their  capital  in  thus  guaranteeing 
the  obligations  of  the  company. 

Companies  whose  business  is  conducted  on  the  par- 
ticipating plan  (in  which  the  policyholders  occupy  a 
position  somewhat  analogous  to  that  of  business  part- 
ners) are  usually  willing  to  issue  a  non-participating 
policy  when  a  customer  prefers  that  plan.  This  it  can 
afford  to  do  because  the  surplus  earned  on  participat- 
ing policies  gives  the  company  a  stability  which  makes 
a  few  such  transactions  absolutely  safe.  It  has  not 
been  regarded  as  prudent,  however,  for  a  company 
organized  on  the  mutual  plan,  if  without  capital,  to 
confine  its  business  to  the  non-participating  plan.* 

THE    YEARLY    RENEWABLE   TERM   POLICY. 

We  have  already  seen  that,  although  few  people  want 
to  pay  for  their  insurance  on  the  natural  plan,  that 
plan  is  sound  and  legitimate.  A  policy  can  be  issued 
on  that  basis  with  the  understanding  that  although  the 
premium  paid  each  year  covers  the  insurance  for  that 
year  only,  the  company,  nevertheless,  binds  itself  to 
renew  the  insurance  from  year  to  year,  provided  a 
premium  covering  the  risk  assumed  each  year  is  paid. 

*But  see  note  at  foot  of  page  58. 


DIFFERENT  POLICIES  ARE  OF  EQUAL  VALUE       77 

And  the  premium  to  be  adequate,  as  we  have  seen, 
must  increase  from  year  to  year. 

This  kind  of  insurance  is  called  a  Yearly  Renewable 
Term  Policy.  The  insurance  is  granted  for  the  term 
of  one  year ;  then  on  payment  of  the  second  premium 
it  is  renewed  for  the  term  of  another  year,  and  so  on. 

It  is  not  usual  to  pay  dividends  on  this  policy,  and  it 
has  no  surrender  value  in  the  event  of  lapse. 

When  such  a  policy  is  taken,  it  is  usually  for  tem- 
porary protection  and  is  dropped  after  it  has  served 
its  purpose. 

It  may  be  continued  for  life,  however,  although  it  is 
usual  if  such  a  policy  is  continued  beyond  age  65,  to 
convert  it  into  a  level  premium  contract,  in  accordance 
with  such  a  clause  as  the  following : 

"If  continued  beyond  age  64  the  full  premium 
charged  by  the  company  for  an  ordinary  life  policy 
taken  out  at  age  65  must  be  paid,  after  which  there 
will  be  no  further  increase  in  the  premium  rate." 

It  is  usually  stipulated  also  that  the  policy  may  be 
exchanged  at  any  time  for  any  other  form  of  policy 
issued  by  the  company,  at  the  rate  charged  at  the  age 
attained  by  the  insured  at  the  time  the  change  is 
effected.  Hence,  the  agent  can  sometimes  insure  a 
customer  on  this  plan  who  would  otherwise  refuse  to 
take  immediate  action.  But  in  every  such  case  the 
agent  should  follow  the  man  up  and  persuade  him 
later  to  take  permanent  insurance  on  some  other 
plan. 

Few  companies  issue  many  Yearly  Renewable  Term 
policies,  and  some  companies  do  not  issue  them  at  all. 


78 


THE  SUCCESSFUL  AGENT 


Hence  I  have  described  this  kind  of  insurance  simply 
because  it  is  the  best  exponent  of  the  natural  method 
of  charging.  A  plan  more  frequently  utilized  is  a 
modification  of  the  yearly  renewable  term  plan.  It 
provides  for  the  payment  of  a  level  premium  for  a 
short  term  of  years,  and  then  the  insurance  is  renewed 
at  a  higher  rate  for  a  similar  term ;  then  for  another  at 
a  still  higher  rate,  and  so  on. 

YEARLY  RENEWABLE  TERM   POLICY 
GROSS  PREMIUM  RATES. 

FOR  $1,000  OF  INSURANCE. 


AGE 

PREMIUM 

AGE 

PREMIUM 

AGE 

PREMIUM 

21 
22 

$12.53 
12.69 

36 
37 

$16.07 
16.44 

51 
52 

$26.77 
28.17 

23 

12.85 

38 

16.85 

53 

29.69 

24 

13.03 

39 

17.29 

54 

31.39 

25 

13.20 

40 

17.76 

55 

33.21 

26 

13.40 

41 

18.26 

56 

35.23 

27 

13.60 

42 

18.80 

57 

37.42 

28 

13.81 

43 

19.39 

58 

39.82 

29 

14.04 

44 

20.03 

59 

42.46 

30 

14.28 

45 

20.73 

60 

45.34 

31 

14.52 

46 

21.51 

61 

48.49 

32 

14.79 

47 

22.35 

62 

51.94 

33 

15.09 

48 

23.29 

63 

55.70 

34 

15.39 

49 

24.34 

64 

59.81 

35 

15.71 

50 

25.50 

CHAPTER    III. 
POLICY-CONTRACTS.   (Continued.) 

THE   RETURN    PREMIUM   POLICY. 

The  Return  Premium  policy  provides  that  if  the  in- 
sured dies  within  a  certain  period  the  company  will 
not  only  pay  the  face  of  the  policy,  but  will  return  all 
the  premiums  that  have  been  paid. 

To  the  uninitiated  this  may  seem  an  impossible 
transaction.  How  can  a  company  assume  a  risk  for 
a  number  of  years  and  then  give  back  all  the  money  it 
has  received?  The  answer  is  that  the  company  does 
not  agree  to  return  the  premiums  except  in  the  cases 
where  death  intervenes.  It  charges  every  person  who 
takes  such  a  policy  an  increased  premium ;  and  the  in- 
creased rate  paid  by  all,  including  those  who  survive, 
covers  the  extra  insurance  granted  to  those  who  die. 
Thus  it  will  be  seen  that  the  return  premium  policy  is 
simply  a  policy  under  which  the  insured  pays  an 
additional  sum  so  as  to  insure  the  amount  of  money 
which  he  pays  to  the  company  in  premiums.  The 
result  is  that  in  the  event  of  death  within  a  designated 
period  of  years,  the  company  will  pay  the  face  of  the 
policy  together  with  the  premiums  received. 

THE    DOUBLE    ENDOWMENT   POLICY. 

This  is  a  good  policy  for  a  young  man  who,  wishing 
the  protection  of  insurance,  desires  primarily  to  force 
himself  to  save  something  from  year  to  year. 


80  THE  SUCCESSFUL  AGENT 

It  is  also  a  policy  which  can  be  safely  issued  upon 
the  life  of  a  man  who,  for  any  reason,  is  not  likely  to 
outlive  his  "  expectation. " 

The  double  endowment  is  simply  an  endowment  on 
which  in  consideration  of  a  higher  premium  (a)  the 
face  value  of  the  policy  is  payable  if  death  occurs  dur- 
ing the  endowment  period,  and  (b)  double  its  face 
value  at  the  end  of  the  period  if  death  does  not  inter- 
vene. 

It  is  an  expensive  policy  for  the  man  who  dies,  but 
a  cheap  policy  for  the  man  who  survives. 

THE   JOINT   LIFE   POLICY. 

A  policy  may  be  issued  on  two  or  more  lives,  the  in- 
surance to  be  paid  when  the  first  death  occurs.  But 
this  form  of  policy  is  almost  obsolete.  When  a  man 
and  wife,  for  example,  decide  to  insure  jointly,  or  when 
partners  in  business  wish  to  protect  one  another,  it  is 
usual  to  issue  a  separate  policy  on  each  life.  Thus  the 
insurance  can  be  dealt  with  more  conveniently  and 
readjusted  more  easily. 

DIFFERENT  METHODS  OF  SETTLEMENT. 

When  a  policy  has  matured,  and  the  time  has  come 
for  the  company  to  pay,  it  is  the  modern  custom  to 
give  the  beneficiary  the  choice  of  several  methods  of 
settlement. 

The  entire  amount  of  the  insurance  may  be  drawn 
in  cash,  thus  ending  the  transaction. 

Or,  the  whole  sum  may  be  left  with  the  company  for 
a  term  of  years,  or  during  the  lifetime  of  the  benefi- 


POLICY-CONTRACTS  81 

ciary  ;  the  company  agreeing  meanwhile  to  pay  the 
beneficiary  a  certain  income. 

Or,  the  money  may  be  drawn  in  equal  annual  instal- 
ments extending  over  any  desired  period,  such  as  10 
years;  30  years,  or  50  years.  If  this  settlement  is 
selected,  the  company  can  afford  to  allow  interest  on 
the  deferred  payments,  thus  increasing  the  amount  so 
disbursed.  Hence  the  longer  the  period  selected  the 
larger  the  return.  For  example :  if  the  period  selected 
is  50  years,  sufficient  time  is  given  for  interest  (at  3%) 
to  very  nearly  double  the  amount  paid.  For  example : 
the  sum  of  $50,000  of  insurance  payable  in  cash  in 
advance,  could  be  paid  in  50  equal  instalments  of 
$1,886.50,  extending  over  a  period  of  50  years;  thus 
yielding  a  total  of  $94,325. 

There  is  another  method  of  settlement  which  has 
been  very  popular,  and  which  is  a  modification  of  the 
above,  called  the  Continuous  Instalment  plan.  It  is 
an  excellent  method  of  adjustment  in  a  case  where 
there  is  only  one  beneficiary  to  provide  for,  or  where 
a  separate  policy  can  be  taken  for  each  beneficiary. 

It  provides  that  the  insurance  shall  be  paid  in  twenty 
instalments.  All  twenty  instalments  must  be  paid 
in  any  event,  and  if  the  beneficiary  outlives  the  period 
during  which  the  twenty  instalments  are  payable,  the 
instalments  will  be  continued,  in  the  form  of  an  annu- 
ity, as  long  as  the  beneficiary  lives. 

Thus,  a  father  who  is  able  to  support  a  daughter  as 
long  as  he  lives,  can  guarantee  her  a  fixed  income  for 
life,  beginning  at  the  moment  his  support  will  be  with- 
drawn. 


82  THE  SUCCESSFUL  AGENT 

This  kind  of  insurance  when  issued  on  the  endow- 
ment form  is  appropriate  for  a  man  and  his  wife,  if 
they  have  no  children  or  other  dependents.  Take  an 
illustration:  Such,  insurance,  issued  on  the  twenty 
year  endowment  form,  provides  that  if  the  husband 
dies  prematurely  the  company  shall  immediately  be- 
gin to  pay  the  instalments  agreed  upon  to  the  widow, 
with  the  stipulation  that  they  shall  continue  as  long 
as  she  lives.  If  both  are  living  at  the  end  of  twenty 
years,  the  instalments  begin  then,  and  continue  as  long 
as  the  one  who  lives  longest  survives. 

Another  plan,  (which  may  be  made  compulsory 
upon  the  beneficiary)  is  to  convert  the  insurance  when 
the  policy  matures,  into  an  annuity  payable  during 
the  lifetime  of  the  beneficiary.  This  adjustment  is 
not  unlike  that  under  a  Continuous  Instalment  Policy, 
but  it  differs  in  this  respect:  the  annuity,  instead  of 
being  payable  for  twenty  years  and  thereafter  during 
the  lifetime  of  the  beneficiary,  will  cease  as  soon  as  the 
beneficiary  dies  even  if  that  should  be  within  the  first 
year.  In  consideration  of  this,  the  sum  payable  each 
year,  other  things  being  equal,  will  be  more  than  in 
the  case  of  a  Continuous  Instalment  Policy.  The 
exact  amount  of  the  annuity  in  this  case  cannot  be 
known  in  advance  because  the  insurance  due  on  the 
maturity  of  the  policy  will  procure  a  larger  or  smaller 
annuity  according  to  the  age  of  the  beneficiary  at 
that  time. 

Many  a  man  who  would  not  think  of  investing  in  a 
policy  payable  in  cash  can  be  interested  in  a  policy 
under  which  the  insurance  will  mature  in  an  invested 


POLICY-CONTRACTS  83 

form.  Every  man  knows  that  widows  and  minors 
often  lose  or  waste  money  inherited.  Insurance  is 
doubly  sure  when  the  husband,  or  father,  stipulates 
that  the  money  due  upon  the  maturity  of  the  policy 
shall  remain  with  the  company,  and  that  the  benefi- 
ciary shall  receive  only  the  income  on  it,  or  shall  re- 
ceive the  money  in  annual  instalments,  or  in  the  form 
of  an  annuity  for  life, 


CHAPTER     IV. 
THE  NEW  YORK   INSURANCE  LAW. 

THE    STANDARD    POLICY. 

Every  young  agent  is  inclined  to  think  that  he  has 
peculiar  difficulties  to  face,  and  that  it  must  have  been 
far  easier  to  solicit  life  insurance  in  "the  good  old 
days."  But  although  his  difficulties  may  differ  in 
many  respects  from  those  encountered  by  the  agents 
who  have  preceded  him,  it  does  not  necessarily  follow 
that  they  are  greater  or  more  perplexing. 

I  can  remember  many  periods  when  it  was  far  more 
difficult  to  write  insurance  than  it  is  today — periods 
of  financial  depression,  periods  of  doubt  and  uncertain- 
ty following  financial  panics ;  periods  when  the  public 
grew  suspicious  of  all  corporations. 

There  was  a  time  when  all  policies  contained  war- 
anty  clauses  which  enabled  the  companies  to  contest 
death  claims  on  a  great  variety  of  technical  or  trivial 
grounds.  In  those  days  adjusters  were  sent  through 
the  country  to  make  compromises,  and  men  were  pub- 
licly warned  against  insuring  lest  they  should  leave  to 
their  wives  and  children  lawsuits  instead  of  legacies. 
During  that  period,  abuses  such  as  these  made  it  al- 
most impossible  for  agents  to  do  business. 

Everyone  will  agree  that  the  years  1905  and  1906 
have  been  difficult  years.  First,  because  many  errors 
which  had  crept  into  the  business  were  then  exposed, 


THE  NEW  YORK  INSURANCE  LAW  85 

and  second,  because  the  people  hesitated  to  insure 
until  the  reforms  suggested  had  been  carried  out. 

But  with  the  year  1907  we  have  entered  upon  a  new 
era,  and  the  agents  who  are  able  to  adapt  themselves 
to  new  conditions  will  undoubtedly  reap  a  rich  harvest. 
The  stability  of  life  insurance  has  been  demonstrated. 
The  great  financial  strength  of  the  reputable  com- 
panies has  been  emphasized.  The  methods  of  con- 
ducting the  business  have  been  readjusted  along  more 
conservative,  economical,  and  safer  lines.  And  last, 
but  not  least,  an  intelligent  public  interest  has  been 
awakened  in  life  insurance,  and  men  will  now  listen 
to  the  agent. 

The  insurance  laws  of  several  States  are  being  re- 
vised, and  in  the  State  of  New  York,  Standard  Policy 
forms  have  been  framed  for  the  protection  of  policy- 
holders. 

A  brief  description  of  the  new  Standard  Policy  of 
the  State  of  New  York  may  not  be  out  of  place. 

A  variety  of  standard  forms  are  authorized  by 
this  law.*  I  shall  touch,  by  way  of  illustration,  only 
on  the  Ordinary  Life  Form. 

The  policy  is  the  entire  contract. 

The  company  agrees  to  pay  the  face  of  the  policy 
immediately  upon  the  receipt  of  evidence  that  the 
insured  is  dead.  The  only  consideration  for  this  prom- 
ise to  pay,  is  the  agreement  on  the  part  of  the  insured 
to  pay  the  premiums  as  they  fall  due. 


"Under  this  law  the  company  can  transact  its  business  on  the  participat- 
ing plan  or  on  the  non-participating  plan.  It  is  free  to  choose,  but  cannot 
issue  both  kinds. 


86  THE  SUCCESSFUL  AGENT 

The  insured  can  make  the  beneficiary  the  absolute 
owner  of  the  policy,  or  may  reserve  the  right  to  change 
the  beneficiary  at  pleasure. 

If  any  conditions  as  to  residence,  travel,  occupation, 
suicide,  etc.,  are  inserted,  they  must  restrict  the  con- 
tract for  a  single  year  only. 

If  the  policy  is  a  participating  contract,  dividends 
must  be  declared  annually. 

After  the  policy  has  reached  a  certain  age  (usually 
three  years)  it  has  a  loan  value,  increasing  from  year 
to  year ;  and  a  surrender  value,  either  in  cash,  paid-up 
insurance,  or  extended  term  insurance. 

The  policy  may,  like  any  other  similar  contract,  be 
assigned  by  the  owner  to  any  desired  assignee. 

The  contract  provides  that  after  three  years,  in  the 
event  of  lapse,  if  no  surrender  value  is  asked  for,  the 
policy  shall  be  continued  automatically  in  the  form 
of  extended  term  insurance. 

If  the  policy  is  permitted  to  lapse,  it  may  be  res- 
tored subject  to  reasonable  conditions. 

The  insured  may  limit  the  beneficiary  to  a  specific 
method  of  settlement  upon  the  maturity  of  the  policy, 
or  the  beneficiary  may  be  allowed  to  choose  any  one 
of  the  following  options: 

A  settlement  in  cash. 

A  settlement  in  equal  annual  instalments. 

A  settlement  in  continuous  instalments;  or 

The  money  may  be  left  with  the  company  at  interest 
during  the  lifetime  of  the  beneficiary  and  paid  when 
the  beneficiary  dies. 

It  is  not  a  necessary  part  of  the  contract,  but  the 


THE  NEW  YORK  INSURANCE  LAW  87 

proceeds  of  the  policy  may  be  converted  at  maturity 
into  an  annuity  on  the  life  of  the  beneficiary,  or  on  the 
life  of  any  other  designated  person. 

The  Standard  forms  are  fewer  in  number  than  the 
old  forms  which  they  supersede,  but,  as  a  compensa- 
tion, great  flexibility  is  given  to  the  Standard  policy 
by  the  various  ways  in  which  the  insurance  can  be  util- 
ized at  maturity  and  the  variety  of  ways  in  which  it 
can  be  dealt  with  before  maturity. 

The  agent  who  offers  the  New  York  Standard  Policy, 
or  any  similar  policy,  will  do  well  to  study  in  advance 
the  circumstances  of  his  customer,  and  then  center  his 
attention  on  the  method  of  settlement  which  suits 
those  circumstances  best;  calling  attention  incident- 
ally to  the  other  attractions  of  the  contract. 

The  Standard  Policy  is  a  long  contract  chiefly  be- 
cause of  the  variety  of  options  offered. 

Some  of  its  provisions  may  seem  obscure  to  the  un- 
initiated. This  the  agent  may  turn  to  good  advan- 
tage by  requesting  an  interview  for  the  purpose  of  ex- 
plaining them. 


BOOK   III 


HOW  THE  AGENT  CAN  BEST  DISPOSE  OF  HIS 
WARES. 


PRACTICAL  HINTS  FOR  THE  CANVASSER. 


INTRODUCTION  TO  BOOK  III. 


The  agent  who  has  mastered  the  principles  of  life  insur- 
ance ;  understands  its  practice,and  has  familiarized  him- 
self with  the  policies  offered  by  the  company  he  repre- 
sents, has  still  much  to  learn.  He  must  understand  him- 
self, and  must  become  a  close  student  of  character.  He 
must  learn  how  to  offer  his  wares  to  the  best  advantage ; 
how  to  find  customers,  how  to  interest  and  convince 
them;  how  to  systematize  his  work  and  concentrate  his 
energies;  how  to  economize  his  time  and  render  his  labors 
remunerative. 

He  must  discover  both  what  he  must  do  and  what  he 
must  avoid;  what  he  must  say  and  what  he  must  leave 
unsaid ;  when  to  push  forward  and  when  to  await  devel- 
opments. 

To  perfect  himself  he  must  be  a  close  student,  and  ob- 
tain an  education,  just  as  a  doctor  or  a  lawyer  fits  him- 
self for  his  profession.  And  while  the  better  part  of  this 
education  must  come  from  practice  and  experience,  there 
is  much  valuable  instruction  that  he  may  secure  from 
others,  which  if  turned  to  practical  account  will  be  of 
great  assistance  to  him  in  his  business. 

The  aim  has  been  to  gather  together,  in  this,  the  third 
section  of  this  book,  advice  which  every  agent  can  utilize. 

And  it  is  hoped  that  the  counsel  thus  offered  will  not 
only  prove  valuable  in  itself,  but  will  suggest  lines  of 
thought  that  will  enable  the  reader  to  work  out  many  use- 
ful principles  and  projects. 


BOOK  III 


CHAPTER    I. 
THE  AGENT  A  SPORTSMAN. 

ANALOGIES    BETWEEN   FISHING   AND   CANVASSING. 

Christianity,  whether  it  be  regarded  as  of  divine  or 
of  human  origin,  is  universally  recognized  as  a  mighty 
force.  And  it  is  interesting  to  note  that  the  men  first 
selected  to  spread  its  doctrines  were  fishermen,  who 
left  their  nets  and  became  "fishers  of  men." 

The  analogies  between  fishing  and  canvassing  are 
many  and  striking,  but  there  is  one  significant  differ- 
ence :  It  is  the  aim  of  the  fisherman  to  devour.  It  is 
the  aim  of  the  canvasser  to  protect.  The  province  of 
the  agent  (like  that  of  the  apostle)  is  to  rescue ;  not  to 
destroy. 

The  fisherman  must  do  four  things:  find  his  fish; 
lure  him  to  his  bait;  hook  him,  and  land  him.  The 
agent  must  do  likewise:  find  his  customer;  interest 
him ;  hook  him  (persuade  him  to  sign  an  application) 
and  land  him  (induce  him  to  bind  the  contract  by 
paying  the  first  premium.) 

Fish  are  not  anxious  to  be  caught,  and  men,  do  not 
wish  to  be  insured. 

You  can't  expect  to  catch  fish  by  staying  at  home. 


94  THE  SUCCESSFUL  AGENT 

And  even  if  you  go  to  the  river 's  brink  and  sit  down  by 
the  water's  edge,  the  chances  are  that  no  fish  will  jump 
into  your  lap.  Thus  it  is  with  the  agent  who  stays  in 
his  office  to  insure  the  men  who  drop  in  to  buy  policies 
— Such  men  run  the  risk  of  starving  to  death. 

The  fisherman  must  study  the  habits  of  fish;  learn 
where  they  congregate;  discover  when  and  how  they 
can  be  most  readily  attracted,  and  by  what  means  they 
can  most  certainly  be  captured.  He  must  know  when 
to  wait  and  when  to  strike.  One  kind  of  fish  must  be 
played  until  he  is  tired  out;  another  must  be  yanked 
out  like  an  aching  tooth. 

If  the  fish  refuses  to  bite  the  angler  must  exercise 
patience  and  perseverance,  changing  his  bait,  or  his 
fly,  until  he  discovers  something  that  will  take. 
Thus  it  is  with  the  agent. 

The  fisherman  can  often  succeed  in  attracting  a 
school  of  fish  by  throwing  out  " ground  bait,"  but  he 
can  only  catch  them  with  the  bait  that  is  on  his  hook. 
The  agent  uses  ground  bait  also.  He  advertises,  and 
distributes  books  and  pamphlets,  but  his  subsequent 
work  is  the  only  thing  that  pays. 

The  young  agent  will  find  his  chief  difficulty  in  hook- 
ing and  landing  his  fish,  but  the  experienced  agent  will 
say,  "Show  me  the  man  who  can  afford  to  insure, 
and  let  me  get  at  him,  and  I'll  do  the  rest  with  ease 
and  dispatch." 

The  inexpert  fisherman  blames  the  place,  or  the 
weather,  or  his  tackle,  or  the  fish.  The  competent 
fisherman  asks  for  but  one  thing — fish  to  catch.  The 
unsuccessful  agent  complains  of  his  territory,  or  the 


THE  AGENT  A  SPORTSMAN  95 

people  he  is  thrown  with,  or  the  failure  of  his  manager 
or  company  to  back  him.  The  competent  agent  suc- 
ceeds anywhere  and  everywhere. 

In  fishing  and  in  canvassing,  failure  is  usually  due 
to  lack  of  determination,  lack  of  care,  or  sheer  laziness. 
Every  young  agent  should  paste  in  his  hat  the  follow- 
ing maxim,  attributed  to  Abraham  Lincoln,  "If  you 
intend  to  go  to  work,  there  is  no  better  place  than 
where  you  are.  If  you  do  not  intend  to  go  to  work, 
you  cannot  get  along  anywhere. "  And  Lincoln  knew. 
Not  long  ago  a  New  York  paper  after  making  the 
assertion  that,  "Lincoln  was  a  great  man,"  continued : 

"Let  the  young  man  who  thinks  that  he  hasn't  a 
chance  in  the  world  and  ought  to  be  pitied,  read  over 
what  Lincoln  said  about  his  own  education.  Let  him 
remember  the  conditions  under  which  Lincoln  lived, 
reading  his  few  books  by  the  light  of  a  fire,  writing  on 
the  back  of  a  wooden  shovel,  then  shaving  off  the 
wood,  so  as  to  get  a  new  place  to  write. 

It  is  clear  that  the  man  who  has  it  in  him  and  who 
wants  to  can  succeed." 

The  following  advice  was  given  to  a  young  man  who 
had  just  taken  up  his  abode  in  the  city  of  Florence : 

"In  order  to  earn  a  living  in  Florence,  it  is  necessary 
for  a  man  to  be  industrious — that  is  to  say,  he  must 
constantly  use  his  mind  and  judgment,  and  be  quick 
and  sharp  in  all  that  he  does,  and  know  how  to  make 
money,  since  Florence,  not  having  a  naturally  rich 
and  fertile  territory,  cannot  supply  the  means  of 
living  at  a  small  cost." 

No  better  advice  could  be  given  to  any  young  agent 
about  to  open  an  office,  and  yet  this  counsel  was  given 


96  THE  SUCCESSFUL  AGENT 

some  centuries  ago  by  an  experienced  artist  to  a  strug- 
gling young  painter  who  afterwards  won  fame  and 
fortune,  and  became  one  of  the  great  masters  of  the 
Florentine  School. 

Don't  misinterpret  this  advice.  If  you  have  a 
choice  select  the  best  field,  but  having  made  your 
selection,  let  nothing  stand  in  the  way  of  your  success. 

Henry  James  has  referred  to  the  fishermen  of  the 
Loire  as  notable  examples  of  men  who  follow  "art  for 
art's  sake;"  the  assumption  being  that  although 
always  fishing  these  anglers  never  catch  any  fish.  But 
there  is  more  wit  than  truth  in  the  remark.  The 
serious  lesson  actually  taught  by  these  anglers  is  that 
perseverance  pays,  for  I  have  eaten  many  an  excellent 
fish  caught  in  that  famous  French  river. 

From  all  this  the  intelligent  reader  will  gather  three 
points:  1.  Where  there  are  fish,  fish  can  be  caught. 
2.  If  you  can  choose,  go  where  fish  are  most  plenti- 
ful. 3.  But  wherever  you  go,  catch  fish. 

The  secret  of  success,  whether  you  are  an  angler  or 
an  agent,  is  to  be  so  in  love  with  your  work  that  you 
will  shirk  no  toil;  never  become  discouraged,  and 
always  be  willing  to  take  infinite  pains. 

"As  soon  as  a  man  begins  to  love  his  work,  then 
will  he  also  begin  to  make  progress." 

THE   SUCCESSFUL  AGENT   A  MIGHTY  HUNTER. 

I  have  likened  the  successful  agent  to  the  skillful 
fisherman.  Perhaps  it  would  be  more  appropriate  to 
describe  him  as  a  mighty  hunter;  for  the  agent  seeks 
his  game  chiefly  on  terra  firma,  although  it  is  true  that 


THE  AGENT  A  SPORTSMAN  97 

he  can  make  acquaintances  at  sea  and  establish  busi- 
ness relations  with  them  after  reaching  shore.  And  I 
once  heard  of  a  man  who  frequented  a  famous  water- 
ing place  for  the  purpose  of  warning  the  bathers 
against  the  dangers  of  the  deep — but  that  man,  I  be- 
lieve, was  in  the  accident  business. 

If  you  keep  the  fact  constantly  in  mind  that  you  go 
forth,  not  to  slaughter  but  to  protect  life,  you  can 
learn  many  lessons  from  the  successful  huntsman. 

Consider  the  patience  with  which  he  follows  his 
game;  and  his  persistence  until  he  has  captured  it. 
Nothing  discourages  him.  He  continues  his  active 
pursuit  until  his  efforts  are  rewarded. 

At  one  time  he  will  find  the  utmost  expedition  essen- 
tial; at  another  he  will  prove  the  truth  of  that  much 
abused  proverb,  "Everything  comes  to  him  who 
waits. " 

But  remember  that  you  can  neither  fill  your  game 
bag,  nor  write  applications  unless  you  are  constantly 
on  the  alert  and  always  ready  to  act. 

CANVASSING   A   NOBLE   SPORT. 

Canvassing  for  life  insurance  is  a  noble  sport,  and 
one  into  which  a  man  may  well  throw  all  his  energies 
with  one  aim,  and  one  only,  namely,  the  determination 
to  win  an  honest  victory. 

To  the  agent  who  thoroughly  appreciates  the  qual- 
ity of  his  work;  his  enthusiasm;  his  eagerness  to  tri- 
umph ;  his  gratification  when  success  has  been  achieved, 
will  be  like  that  of  the  winning  football  player  who 


98  THE  SUCCESSFUL  AGENT 

throws  all  his  intellectual  and  physical  powers  into  an 
irresistible  determination  to  win. 

Canvassing  may  also  be  likened  to  our  national 
game.  No-plays,  as  well  as  mis-plays,  are  errors — 
the  failure  to  do  the  right  thing  at  the  right  time. 

THE   AGENT   IS   A   NECESSITY. 

The  excuse  which  the  agent  has  for  being  an  agent 
is  the  fact  that  men  will  not  insure  voluntarily.  It  is 
true  that  the  companies  can  get  along  without  agents, 
but  the  people  cannot.  Until  the  agent  converts 
them  they  do  not  insure.* 

*The  Old  Equitable  of  London  is  an  eminently  sound  company  and  will 
reach  its  150th  birthday  in  1912.  It  advertises  that  it  has  never  employed 
agents.  That  explains  the  fact  that  its  influence  has  been  very  limited. 
Its  average  output  of  policies  during  the  last  10  years  has  been  less  tkan 
one  policy  a  day.  During  the  365  days  of  1905,  for  example,  it  wrote 
altogether  only  290  policies. 


CHAPTER    II. 
THE  DIGNITY  OF  THE  AGENT'S  CALLING. 

The  agent  follows  an  honorable  and  dignified  calling, 
which  deserves  to  be  classed  with  the  learned  profes- 
sions. 

It  furnishes  scope  for  the  highest  attainments  and 
for  the  loftiest  ambitions. 

It  gives  him  rare  opportunities.  No  man  ahead  of 
him  can  arrest  his  progress,  if  he  is  willing  to  push  for- 
ward. There  is  no  calling  in  which  the  maxim  that 
"There's  always  room  at  the  top*'  applies  with  more 
force ;  for  the  high  altitudes  are  only  to  be  reached  by 
the  agents  who  are  vigorous,  self-reliant,  courageous 
and  expert. 

Genius,  talent,  learning,  position,  influence,  can  all 
be  utilized;  while  the  man  of  moderate  attainments 
can  be  certain  of  a  measure  of  success  if  he  have  but 
integrity  of  purpose  and  is  diligent  in  business. 

It  is  a  stimulating  pursuit,  sharpening  the  wits  and 
hardening  the  muscles.  The  life  of  the  agent  is  whole- 
some, and  unrestricted.  He  is  not  tied  down  to  an 
office,  or  bound  by  red  tape.  He  goes  and  comes  at 
will,  playing  when  he  pleases  and  working  when  he 
chooses — But  he  must  choose  to  work  if  he  expects  to 
succeed. 

He  is  constantly  making  new  acquaintances,  and 
extending  his  sphere  of  influence. 


100  THE  SUCCESSFUL  AGENT 

He  learns  to  read  character,  and  to  sway  mens' 
minds. 

He  engages  constantly  in  contests  of  the  highest  in- 
tellectual quality;  and  the  joys  of  the  victories  he  wins 
are  sweet. 

There  are  some  callings  in  which  a  man  may  legiti- 
mately engage  wherein  his  gain  may  be  another's  loss. 
There  are  others,  accounted  reputable,  which  are 
actually  pernicious  in  their  general  influence.  But 
the  agent,  although  his  primary  object  is  to  earn 
money,  is  constantly  teaching  lessons  of  self-reliance, 
thrift,  providence,  and  benevolence.  Hence  the  agent, 
if  he  work  wisely  and  well,  not  only  makes  money,  but 
benefits  his  fellow  men  ,while  making  himself  a  better, 
a  stronger,  and  a  broader  man. 

The  following  testimony  has  been  gathered  from 
the  writings  of  men  who  have  been  successful  agents 
and  know  what  they  are  talking  about.  I  commend 
their  opinions  to  all  youthful  agents. 

There  is  no  business  in  which  it  is  possible  for  a 
man  without  capital  to  achieve  such  a  financial 
success  as  in  life  insurance.  In  no  other  occupation 
can  a  man  without  any  resources  other  than  brains, 
energy  and  integrity,  secure  so  great  a  pecuniary 
reward  for  his  labor.  The  possibilities  of  this  business 
to  an  agent  are  limited  only  by  his  capacity  and 
willingness  to  work. 


There  are  now  more  opportunities  to  attain  fin- 
ancial success  in  the  life  insurance  business  than  in 
any  of  the  so-called  learned  professions.  The  latter 
are  overcrowded.  Many  attorneys  are  without  clients, 


THE  DIGNITY  OF  THE  AGENTS  CALLING          101 

many  physicians  are  without  patients,  and  most 
clergymen  are  struggling  along  on  starvation  wages. 
The  lawyer,  or  the  doctor,  has  to  put  up  his  sign 
and  then  sit  down  and  wait  for  something  to  turn  up. 
In  life  insurance  the  agent  can  go  out  and  turn  some- 
thing up. 

While  in  life  insurance  work  there  are  great  oppor- 
tunities for  young  men,  those  more  advanced  in  years 
are  not  debarred,  as  in  many  lines  of  business.  The 
old  man's  experience  in  the  business  should  become 
increasingly  valuable  so  long  as  he  has  the  physical 
and  mental  strength  to  continue  his  work.  This  is 
a  consideration  of  no  small  importance  in  choosing  a 
life  work,  when  one  remembers  that  in  many  lines  of 
business  and  in  many  professions  advanced  years  bring 
decreased  earnings  or  entire  lack  of  employment. 

This  business  makes  a  man  a  clear  thinker  and  a 
good  talker. 

The  wise  agent  learns  to  sift  things  quickly,  and  to 
retain  and  use  for  his  own  purposes  anything  that 
can  be  made  to  work  for  his  good. 


His  occupation  is  a  healthy  one.  He  is  not  con- 
fined within  four  walls,  as  the  majority  of  business 
men  are,  with  only  a  "breathing  spell"  on  Sunday. 
He  gets  pure  oxygen  and  a  reasonable  amount  of 
exercise  all  the  week.  He  is  his  own  master. 


There  is  nothing  humdrum  about  the  work;  it  has 
all  the  charm  of  variety  from  day  to  day.  "So 
many  men,  so  many  opinions,"  and  each  man  must 
be  handled  differently  from  his  neighbor;  so  the 
life  insurance  agent  who  follows  his  work  in  the  best 
way,  and  with  the  highest  aim,  comes  in  time  to  be  a 
diplomat  as  well  as  a  man  of  bright  mentality  and 


102  THE  SUCCESSFUL  AGENT 

keen  judgment.  He  grows  to  be  very  much  alive. 
He  has  to  be.  He  reads  of  some  happening  in  the 
morning  newspaper  and  goes  right  out  and  takes 
advantage  of  the  circumstance.  He  keeps  up-to-date; 
he  has  no  time  to  go  to  sleep.  His  neighbor  may  grow 
sluggish  and  stupid,  but  he  cannot  or  he  will  quit 
advancing. 

The  life  insurance  agent  is  constantly  meeting 
different  mentalities  and  battling  with  them.  This, 
to  a  keen  mind,  is  a  delight. 


What  a  man  can  do  is  his  greatest  ornament. 
Not  what  comes  to  him  by  chance  or  inheritance; 
but  what  he  can  do.  There  is  a  dignity  and  a  joy  in 
doing,  that  many  men  never  see,  because  their  vision 
does  not  reach  beyond  the  necessity  and  the  drudgery 
of  it. 

Our  business  in  life  is  not  to  get  ahead  of  other 
people,  but  to  get  ahead  of  ourselves;  to  break  our 
own  record;  to  outstrip  our  yesterdays  by  to-days; 
to  do  our  work  with  more  force  and  a  finer  finish 
than  ever — this  is  the  true  idea — to  get  ahead  of  our- 
selves. 


CHAPTER     III. 
GENERAL  ADVICE  TO  THE  YOUNG  AGENT. 

WHAT   HE   MUST   DO   FIRST. 

If  you  have  decided  to  become  a  canvasser,  the  first 
thing  for  you  to  do  is  to  burn  your  bridges  behind  you ; 
draw  your  sword,  and  throw  the  scabbard  away. 

It  may  have  been  all  very  well  for  you  to  have  had 
doubts  and  fears  in  the  beginning — to  have  studied 
the  situation  very  carefully  before  making  up  your 
mind — but  now  that  you  have  chosen  your  calling 
and  taken  it  up,  you  should  "lay  aside  every  weight" 
and,  "forgetting  those  things  which  are  behind,  and 
reaching  forth  unto  those  things  that  are  before, "  you 
should  "run  with  patience  the  race  that  is  set  before 
you. "  And  I  give  this  advice,  not  simply  because  of 
its  general  application,  but  because  the  work  of  the 
agent  is  of  a  character  which  makes  this  course  essen- 
tial for  the  man  who  wishes  to  succeed. 

No  man  ever  achieved  conspicuous  success  as  a  can- 
vasser who  did  not  rid  himself  of  entangling  alliances, 
and  adopt  as  his  motto,  "This  one  thing  I  do."  The 
reason  for  this  is  that  his  success  will  depend  largely 
upon  his  own  mental  attitude — on  the  effect  produced 
by  his  mind  and  will  on  the  man  whose  life  he  wishes 
to  insure.  The  agent,  therefore,  who  does  not  throw 
himself  into  his  work,  body  and  soul,  with  absolute 
devotion  and  enthusiasm,  will  fail.  Consequently, 


104  THE  SUCCESSFUL  AGENT 

having  put  your  hand  to  the  plow,  you  must  not  even 
glance  behind  you. 

Follow  this  advice,  and,  if  you  are  resolute,  you  will 
certainly  succeed. 

WHAT  QUALIFICATIONS  MUST  THE  GOOD  AGENT  HAVE  ? 

For  your  encouragement,  let  me  remind  you  that 
there  are  all  sorts  and  conditions  of  men  who  need  in- 
surance. Hence,  all  sorts  and  conditions  of  agents  are 
needed  to  insure  them. 

It  is  not  essential  that  you  should  be  a  glib  talker  or 
persuasively  eloquent.  You  need  not  have  genius  or 
vast  erudition.  You  need  not  have  wealth  or  influ- 
ence. If  you  have  honesty,  industry,  courage  and 
intelligence,  you  cannot  fail;  and  if  in  addition  you 
have  common  sense  and  tact  you  may  count  upon  a 
brilliant  future;  for  common  sense  and  tact  are  the 
most  precious  possessions  of  the  successful  agent; 
for  common  sense  is  the  bullion  of  which  his  in- 
tellectual wealth  will  consist,  and  tact  is  the  money 
coined  from  that  bullion  with  which  he  may  buy  what- 
ever he  desires  in  every  market.  Or,  to  drop  the  fig- 
ure, common  sense  tells  a  man  what  to  do,  and  tact 
shows  him  how  to  do  it. 

THE  AGENT  MUST  GET  HIS  EDUCATION  WHILE  AT  WORK. 

In  the  beginning  it  is  not  so   important  to  know 
what  you  must  be  as  to  know  what  you  must  do. 
Well,  the  first  thing  for  you  to  do  is  to  get  to  work. 


GENERAL  ADVICE  TO  THE  YOUNG  AGENT       105 

There  are  a  great  many  men  in  the  community  who 
recognize  the  value  of  life  insurance,  but  who  are  pro- 
crastinators.  Even  the  inexperienced  agent  (if  he 
represents  a  company  whose  financial  strength  and 
reputation  are  established)  can,  every  now  and  then, 
sell  a  policy  to  such  a  man  before  he  knows  anything 
about  the  details  of  the  business.  By  taking  advan- 
tage of  such  opportunities,  the  young  agent  can  earn 
his  living  while  learning  his  trade. 

A  long  course  of  preliminary  study  is  not  essential. 
Financial,  social  and  political  backing  are  not  essen- 
tial. Nor  is  it  necessary  that,  in  the  beginning,  you 
shall  have  capital.  You  must  get  an  education,  and 
acquire  capital;  but  you  can  secure  both  as  you  go 
along.  Experience  will  be  your  best  teacher  (just  as 
the  young  physician  learns  more  in  the  hospital  than 
from  his  books)  and,  although  money  will  always  be 
useful,  the  capital  which  it  is  essential  for  you  to  have 
is  of  another  kind.  It  is  the  skill  which  experience 
and  practice  will  bring  you. 

BE  CONTENT  WITH  A  SUBORDINATE  POSITION  AT  FIRST. 

If  you  are  astute,  and  wish  to  earn  more  than  a  bare 
living,  and  want  to  achieve  genuine  success  without 
unnecessary  delay,  you  will  do  well  to  get  your  educa- 
tion and  accumulate  your  capital  as  speedily  as  possi- 
ble. To  that  end,  the  best  thing  for  you  to  do  will 
be  to  make  a  contract  with  some  general  agent  who 
will  give  you  the  benefit  of  his  experience  as  a  consid- 
eration for  the  pecuniary  interest  he  will  have  in  the 


106  THE  SUCCESSFUL  AGENT 

business  you  transact.  And  I  advise  you  against  try- 
ing to  strike  too  sharp  a  bargain  with  the  general 
agent.  You  must  pay  for  your  education  in  some  way 
and  this  is  the  most  economical  and  expeditious  way 
within  your  reach. 

As  soon  as  you  have  obtained  your  education  you 
will  be  able  to  shift  for  yourself,  and  may  then  reap  a 
full  reward  for  your  individual  efforts.  It  is  perfectly 
true  that  many  a  young  man,  having  thrown  himself 
into  the  business  of  life  insurance,  has,  without  any 
assistance,  achieved  brilliant  results;  but  it  is  a  ques- 
tion, even  in  such  a  case,  whether  success  would  not 
have  come  sooner  if  he  had  served  an  apprenticeship 
under  an  experienced  guide. 

LEARN   HOW   TO   USE   YOUR   TOOLS. 

One  of  the  first  things  for  the  young  agent  to  do  is 
to  make  a  list,  or  table,  in  four  columns,  embodying 
the  following  information : 

First  Column:  Title  of  every  kind  of  policy,  or 
annuity,  issued  by  the  company  represented. 

Second  Column:  A  word  or  two  opposite  the  title 
of  each  policy  indicating  its  specific  purpose — its  chief 
object. 

Third  Column:  This  should  indicate  the  kind  of 
people  who  can  best  utilize  each  policy  named  in  the 
first  column. 

Fourth  Column:  This  should  contain  the  title  of 
each  canvassing  document  describing,  or  advocating,, 
each  policy. 


GENERAL  ADVICE  TO  THE  YOUNG  AGENT       107 

This  list  should  be  revised  from  time  to  time,  so  as 
to  keep  it  up-to-date;  and  the  agent  should  glance 
over  it  before  starting  out  to  canvass. 

The  chief  advantage  of  preparing  such  a  schedule 
is  not  that  it  will  be  useful  for  reference,  but  that  it 
will  fix  important  facts  in  your  memory.  For  when 
you  are  in  the  midst  of  an  interview  you  must  have 
every  fact  at  the  tip  of  your  tongue.  It  is  then  too 
late  to  search  your  records  for  information. 

It  is  not  a  bad  idea  to  keep  three  small  memoran- 
dum books  in  your  desk. 

In  Volume  1,  record  the  names,  addresses,  and  other 
particulars  regarding  men  whom  you  hope  to  insure. 

In  Volume  2,  jot  down  miscellaneous  points  regard- 
ing your  business. 

In  Volume  3,  enter  every  new  argument  that  comes 
to  your  notice. 

SCOPE   OF   MODERN   UFE   INSURANCE. 

A  volume  might  be  written  on  the  scope  of  modern 
life  insurance.  It  no  longer  limits  its  usefulness  to  the 
protection  of  the  family  on  the  death  of  the  bread- 
winner. It  may  be  utilized  in  a  thousand  ways,  either 
under  a  single  contract  or  by  combining  two  or  more 
contracts  together. 

It  protects  mortgaged  homes.  It  enables  a  man  to 
borrow  money  from  his  bank.  It  secures  debts  and 
gives  stability  to  speculative  ventures.  It  enables  a 
man  to  make  liberal  bequests  without  encroaching 
upon  his  capital.  It  gives  support  to  the  aged,  and 
protects  estates  from  shrinkage. 


108  THE  SUCCESSFUL  AGENT 

But  I  cannot  enlarge  further  upon  this  subject. 
Let  every  agent  study  every  contract  issued  by  his 
company,  and  determine  for  himself  what  each  will 
accomplish,  and  what  combinations  can  be  made 
which  will  in  the  first  place  rouse  curiosity,  and,  in 
the  second  place,  furnish  the  basis  for  a  sound  busi- 
ness proposition  which  will  commend  itself  to  the 
man  whose  case  it  fits. 


CHAPTER     IV. 
HOW  THE  AGENT  MUST  BEGIN. 

A  policy  on  your  own  life  is  the  best  canvassing 
document  you  can  start  out  with. 

If  you  already  have  in  your  pocket  a  policy  issued 
by  the  company  you  represent,  the  only  further  ques- 
tion to  consider  is  whether  you  cannot  afford  to  apply 
for  an  additional  policy.  It  is  not  only  necessary  that 
the  doctor  should  take  his  own  medicine,  but  that  he 
should  take  it  in  adequate  doses. 

It  is  a  matter  of  choice  whether  you  consolidate  your 
insurance  into  one  policy,  or  whether  you  add  a  small 
one  to  your  pile  every  now  and  then. 

I  may  say  in  passing,  that  many  a  man  can  be  in- 
duced, if  properly  guided  by  the  agent,  to  form  the 
insuring  habit.  Not  long  ago  a  wealthy  man  died  in 
Philadelphia  who  carried  a  large  amount  of  insurance 
on  his  life  in  a  number  of  companies.  His  death  re- 
vealed the  fact  that  he  had  made  it  a  practice  to  take 
a  new  policy  whenever  he  embarked  in  a  new  specula- 
tion, or  made  an  investment  whose  success  depended 
in  any  degree  npon  his  personal  supervision.  He  rec- 
ognized the  fact  that  his  wife  was  not  a  business  man, 
and  that  as  she  was  unfamiliar  with  the  details  of  his 
ventures,  many  of  his  investments  would  shrink  in 
value  in  the  event  of  his  death.  Hence,  to  relieve  his 
mind  of  all  anxiety,  he  placed  his  estate  in  an  impreg- 


1 10  THE  SUCCESSFUL  AGENT 

nable  position  by  insuring  every  business  risk  that  he 
ran.  And  his  death  came  suddenly  and  unexpectedly 
from  a  rare  disease  of  which  he  could  have  had  no  pre- 
monition. Now,  the  agent,  whoever  he  was,  that  in- 
stilled the  insuring  habit  into  that  man's  mind  must 
have  been  a  canvasser  of  talent  and  discrimination. 

DO   A   CUMULATIVE   BUSINESS. 

You  should  prosecute  your  business  as  a  boy  makes 
a  snowball.  See  that  it  grows  as  you  roll  it  along. 
See  that  you  not  only  get  new  clients  from  day  to  day, 
but  that,  from  year  to  year,  you  secure  new  insurance 
from  old  customers,  and  from  the  children  of  your 
customers  as  they  assume  the  responsibilities  of  life. 

THE  AGENT  MUST  APPEAL  TO  THE  EYE  AS  WELL  AS  TO 
THE  EAR. 

There  are  many  things  that  you  are  competent  to  do 
before  you  know  much  about  canvassing.  For  one 
thing,  you  can  make  a  good  impression  by  dressing 
well  and  looking  prosperous.  Do  this  at  the  very 
start,  even  if  you  have  to  borrow  the  money  to  pay  for 
your  clothes. 

You  must  also  see  to  it  that  all  the  documents  you 
carry  in  your  pocket  are  neat  and  trim,  and  must  have 
your  rate  book  rebound  if  the  cover  becomes  worn. 

These  suggestions  may  seem  trivial,  but  remember 
that  small  blunders  wreck  large  enterprises,  and  little 
obstructions  throw  heavy  trains  from  the  track.  Per- 
haps you  will  say  that  these  are  such  obvious  truisms 
that  they  hardly  deserve  to  be  mentioned.  But,  as  a 


HOW  THE  AGENT  MUST  BEGIN  1 I 1 

matter  of  fact,  they  are  of  overwhelming  importance, 
and  for  a  very  obvious  reason :  Most  people  judge  the 
company  by  the  opinion  they  form  of  the  agent. 

If  you  are  shabby,  the  stability  of  your  company 
may  be  questioned.  If  you  look  prosperous,  the  sta- 
bility of  your  company  will  be  taken  for  granted. 
And,  as  nothing  succeeds  like  success,  an  air  of  pros- 
perity will  aid  you  in  extending  your  business;  for 
men  are  like  sheep.  Where  one  leads  others  follow. 
Hence,  if  those  whom  you  approach  get  the  impression 
that  you  are  successful,  they  will  conclude  that  their 
neighbors  have  seen  the  wisdom  of  investing  in  life 
insurance,  and  will  be  inclined  to  follow  their  lead. 

There  is  nothing  new  in  all  this.  Here  is  what  an- 
other writer  has  said. 

"Careless  and  shabby  attire,  and  a  rough  demeanor, 
are  not  passports  to  success.  Many  withhold  confi- 
dence and  patronage  from  men  who,  having  little 
apparent  respect  for  themselves,  cannot  inspire 
respect  in  others. 

"A  company  or  a  business  is  largely  judged  by  the 
men  who  advocate  it,  and  no  amount  of  persuasive 
power,  or  knowledge,  or  experience,  will  counteract 
the  prejudice  formed  by  a  shabby  solicitor." 

Avoid  lavish  display,  but  if  you  have  an  office  let 
there  be  an  atmosphere  of  prosperity  about  the  prem- 
ises; and  if  you  have  only  desk  room,  see  that  your 
desk  suggests  a  flourishing  and  carefully  systematized 
business.  And  don't  lie  back  in  your  chair,  with  your 
feet  on  your  desk  and  your  hands  in  your  pockets,  until 
you  have  made  your  fortune  and  can  afford  to  have 
people  observe  that  you  are  idle. 


112  THE  SUCCESSFUL  AGENT 

THE   BEST   POLICY. 

I  love  virtue,  and  wish  it  could  be  said  that  honesty 
is  always  the  best  policy.  But  I  suspect  that  there 
are  many  pursuits  in  which  an  honest  policy  would 
prove  both  embarrassing  and  unprofitable.  Of  one 
thing,  however,  I  am  certain,  and  that  is  that  honesty 
is  the  best  policy  for  the  life  insurance  agent — not 
simply  on  moral  grounds,  but  because  it  pays.  The 
reason  is  obvious.  Most  men  are  conscious  of  the  fact 
that  they  are  ignorant  of  the  details  of  life  insurance, 
and  know  that  they  must  depend  largely  on  what  the 
agent  tells  them.  Consequently  any  agent  who  is  able 
to  build  up  a  reputation  for  doing  the  best  he  knows 
how  for  all  his  clients  will  accumulate  a  capital  which 
he  can  use  to  great  advantage  in  his  business. 

A  good  judge  of  horses  is  not  afraid  to  buy  from  a 
tricky  dealer,  because  he  will  not  strike  a  bargain  until 
he  has  examined  the  horse.  A  man  of  experience  who 
wishes  to  buy  a  house  can  avail  himself  of  the  services 
of  a  sharp  real  estate  agent  without  being  victimized. 
The  capitalist  may  not  consider  it  necessary  to  investi- 
gate the  reputation  of  the  broker  who  offers  him  a 
block  of  bonds  if  he  knows  all  about  the  bonds.  But 
very  few  men  will  buy  life  insurance  if  they  are  in 
doubt  as  to  the  integrity  of  the  agent.  A  life  insur- 
ance policy,  moreover,  is  a  running  contract  which 
may  extend  over  a  long  period.  There  are  contracts 
in  force  today  which  may  not  finally  mature  for  a 
century  or  more.  Take  the  following  example:  A 
young  man  in  1907  marries,  and  insures  his  life.  He 
becomes  the  father  of  a  large  family.  His  youngest 


HOW  THE  AGENT  MUST  BEGIN  113 

daughter  is  born,  say,  in  1925.  Time  slips  by,  and 
finally  his  wife  and  all  his  children  except  this  daughter 
pass  away,  so  he  stipulates  that  at  his  death  the  pro- 
ceeds of  the  policy  shall  be  converted  into  an  annuity 
on  her  life.  He  dies  at  last  and  the  company  issues 
an  annuity  on  the  life  of  the  daughter,  and  continues 
to  pay  her  an  income  from  year  to  year  until  she  dies 
at  an  advanced  age,  early  in  the  21st  century.  An 
intelligent  man  will  consider  it  a  serious  matter  to 
enter  into  such  a  contract.  Hence  the  agent  cannot 
hope  for  success  unless  he  has  established  a  reputation 
for  integrity.  I  have  spoken  of  the  importance  of  be- 
ing neat  and  trim  in  your  appearance.  It  is  more  im- 
portant to  be  upright  in  character.  Puddin'head  Wil- 
son was  right  when  he  said ; 

"Be  careless  in  your  dress  if  you  must,  but  keep 
a  tidy  soul." 


CHAPTER    V. 
HOW  TO  FIND   CLIENTS. 

If  some  fairy  should  give  you  three  wishes  (limiting 
them  to  the  scope  of  your  legitimate  business)  you 
would  doubtless  ask,  first,  for  a  multitude  of  men  able 
to  buy  insurance ;  second,  for  free  access  to  these  men, 
and  third,  for  the  knack  of  insuring  them. 

But  if  you  were  limited  to  a  single  wish,  which  would 
you  select?  Not  the  first,  because  there  are  men  all 
about  you  who  are  uninsured  or  under  insured.  Not 
the  third,  for,  although  you  may  not  know  how  to  can- 
vass, you  can  learn.  The  second  wish  is  the  one  you 
would  cjioose  if  you  are  discreet,  for  the  agent's  chief 
obstacle  is  the  difficulty  of  getting  at  the  men  he  wishes 
to  insure.  I  do  not  refer  to  the  difficulty  of  getting  an 
introduction  or  interview,  but  to  the  difficulty  of  secur- 
ing a  man's  undivided  attention. 

However,  if  you  have  gone  into  this  business  to  win, 
this  evil  will  prove  a  blessing  in  disguise,  for  if  your 
predecessors  had  been  able  to  secure  the  favorable 
attention  of  all  the  men  in  need  of  insurance,  little 
would  now  be  left  for  you.  And  it  is  an  interesting 
fact  that  some  of  the  most  successful  canvassers  are 
those  who  make  a  specialty  of  hard  cases — who  sell 
insurance  to  the  men  who  have  refused  to  listen  to 
other  agents. 

In  devising  ways  and  means  for  getting  at  people 


HOW  TO  FIND  CLIENTS  1 15 

you  must  bring  to  bear  every  gift  you  possess — tact, 
discrimination,  judgment,  ingenuity,  industry  and 
patience. 

But  what,  you  may  ask,  is  the  young  agent  who  is 
without  experience  and  without  influence  to  do? 
Well,  if  he  is  working  among  strangers  he  will  seek  the 
aid  of  the  general  agent.  Or,  if  after  securing  an  in- 
terview, he  is  unable  to  close  the  transaction,  he  can 
appeal  again  to  his  superior  for  help.  Indeed,  many 
young  agents  confine  their  efforts  at  first  to  the  intro- 
duction of  their  friends  to  the  general  agent,  watching 
his  methods  of  procedure,  and  finding  out  how  to  do 
the  trick  later  on  themselves. 

All  this  suggests  the  inquiry,  "Where  is  the  young 
agent  to  look  for  material  on  which  to  work — especi- 
ally if  he  must  shift  for  himself?"  Well,  if  he  has  es- 
tablished himself  in  a  strange  place,  he  must  sharpen 
his  wits  and  make  acquaintances.  He  can  find  out  if 
there  are  any  men  in  the  community  who  know  his 
friends  at  home,  or  who  could  be  reached  through 
people  he  already  knows. 

If  you  begin  work  where  you  are  known,  the  best 
opening  will  be  among  your  friends  and  acquaintances. 
But  in  approaching  them  you  must  exercise  discretion. 
Those  who  have  known  you  as  a  boy  may  not  take 
you  seriously  at  first ;  or  they  may  try  to  put  you  off. 
On  the  other  hand,  there  is  always  danger  that  they 
may  suspect  you  of  making  a  handle  of  your  acquain- 
tanceship so  as  to  take  them  at  a  disadvantage. 

But  if  you  proceed  with  tact  all  such  difficulties  can 
be  easily  overcome. 


1 16  THE  SUCCESSFUL  AGENT 

You  must  always  approach  your  friends  with  frank 
confidence,  avoiding  a  hesitating  or  apologetic  attitude. 

In  some  cases  you  can  make  an  immediate  attack ; 
in  others  you  can  only  get  into  the  citadel  by  gradual 
approaches. 

In  one  case  it  may  not  be  judicious  to  ask  a  friend  to 
do  more  than  put  you  in  the  way  of  getting  at  people 
he  knows.  In  another  case  you  may  deem  it  safe  to 
go  a  step  further  and  say : 

"I  haven't  come  to  take  advantage  of  our  social 
relations.  But  I  have  determined  to  succeed,  and 
if  I  can  get  a  few  important  clients  to  begin  with, 
it  will  help  me.  So  I  want  you  to  insure  through  me 
for  a  nominal  amount.  You  will  get  full  value  for 
what  you  pay — and  the  premium  will  be  a  mere 
trifle;  but  the  benefit  to  me  at  this  critical  period 
of  my  career  will  be  enormous.  So,  as  a  matter  of 
friendship,  I  want  you  for  my  first  client." 

Sometimes  in  such  a  case  your  friend  will  offer  to 
take  a  larger  policy ;  or,  having  thus  lured  him  into  the 
membership  of  your  company,  you  may  induce  him  to 
take  more  insurance  later  on. 

Or  you  might  drop  into  the  office  of  an  acquain- 
tance and  say: 

"I  have  not  called  to  bore  you,  but  I  want  you  to 
remember  that  I'm  in  the  life  insurance  business — that 
I  represent  a  good  company — so  that  whenever  you 
do  want  insurance  you  won't  forget  to  send  for  me." 

To  this  you  might  add : 

"And,  in  this,  I'm  doing  you  a  genuine  service. 
I  have  no  doubt  you're  pestered  almost  to  death  by 
the  agents  of  other  companies.  After  this  you  can 


HOW  TO  FIND  CLIENTS  117 

elude  such  people  by  simply  stating  that  you  have  a 
friend  in  the  business  who  attends  to  all  matters  of 
that  kind  for  you." 

But  in  such  a  case  you  must  remember  that  your 
friend  will  not  send  for  you.  You  must  follow  him  up. 

Or,  you  can  go  to  a  friend  and  say  frankly : 

"I  know  that  you  spend  a  lot  of  money,  and  have 
a  large  family,  and  need  insurance.  The  agents  of 
other  companies  don't  know  this,  or  can't  get  at  you. 
Now,  I  want  you  to  insure,  not  as  a  favor  to  me 
(although  it  will  help  me)  but  because  you  can't  do 
without  it.  You  had  a  close  shave  in  that  auto- 
mobile smash-up  the  other  day,  and  I've  come  to 
you  first,  because,  of  all  the  men  I  know,  you  need 
insurance  most.  It  will  be  of  great  advantage  to  me 
to  have  your  name  on  my  list.  But  don't  let  that 
influence  you.  I'm  doing  you  a  favor,  and  if  our 
relations  are  such  that  you  can't  turn  me  away  as 
you  would  a  stranger,  so  much  the  better  for  you 
and  your  family.  You  can  easily  pay  for  $100,000 
of  insurance.  Any  smaller  amount  would  prove 
inadequate."  Yes,  sign  your  name  at  the  bottom 
of  the  application.  Thank  you." 

When  a  young  man  talks  with  fire  and  enthusiasm — 
when  it  is  apparent  that  he  speaks  from  conviction — 
his  friends  may  smile,  but  they  will  admire  his  pluck. 
So  I  say,  "go  first  to  your  friends,  being  careful  not  to 
approach  them  in  the  wrong  way,  and  let  them  see 
that  you  are  in  earnest,  and  have  "a  reason  for  the 
faith  that  is  in  you." 

MAKE   ACQUAINTANCES. 

But  you  can't  afford  to  depend  forever  on  old 
friends.  It  will  not  take  long  to  exhaust  them — in 
two  senses. 


118  THE  SUCCESSFUL  AGENT 

You  must  spend  much  of  your  time  in  making  new 
acquaintances,  and  learning  all  you  can  about  them; 
for  if  you  know  a  man  you  can  get  at  him,  but  unless 
you  know  all  about  his  circumstances  before  you  try 
to  insure  him,  you  will,  as  a  rule,  fail  to  interest  him. 
And  if  you  don't  interest  him  you'll  be  damned. 

You  can  find  out  how  to  make  acquaintances  for 
yourself  better  than  I  can  tell  you.  It  will  depend 
largely  upon  your  environment  and  personal  charac- 
teristics. 

Be  constantly  on  the  alert.  Take  advantage  of 
every  opportunity.  Use  every  acquaintance  to  make 
others. 

You  can  always  reach  the  tradespeople  with  whom 
you  deal,  and  through  them  can  get  into  communica- 
tion with  their  acquaintances. 

As  soon  as  you  begin  to  take  in  money,  you  must 
deposit  it  in  a  bank,  and  through  that  bank  you  can 
make  valuable  business  connections. 

If  you  have  identified  yourself  with  a  church,  you 
can  reach  its  members.  If  you  join  a  club,  you  can 
use  it  as  a  stepping  stone  to  establish  business  rela- 
tions with  its  members  (outside  the  precints  of  the  club 
of  course.)  You  can  join  a  political  organization,  and 
(if  you  remember  that  you  are  an  agent  and  not  a 
politician)  you  can  thus  extend  your  business. 

Be  ready  to  serve  on  important  committees;  join 
the  board  of  education,  the  municipal  art  society,  or 
the  city  improvement  association. 

Secure  an  election,  if  you  can,  to  the  Chamber  of 
Commerce,  or  accept  a  directorship  in  the  leading  bank 


HOW  TO  FIND  CLIENTS  1 19 

of  your  town.  Don't  let  these  things  distract  your 
attention  from  your  business,  but  use  them  to  increase 
your  influence  and  extend  your  acquaintanceship, 
and  it  will  be  money  in  your  pocket. 

If  Brown  has  applied  for  insurance,  he  may  put  you 
in  the  way  of  insuring  his  friends,  or  you  may  call  upon 
his  friends  and  make  some  courteous  inquiries  regard- 
ing his  health,  environment,  or  financial  standing. 
From  this  you  can  lead  up,  sooner  or  later,  to  a  direct 
appeal.  Formerly,  a  company  refused  to  insure  a 
man  until  he  produced  a  "friend's  certificate, "  recom- 
mending and  endorsing  him.  This  is  no  longer  de- 
manded, but  the  idea  can  still  be  utilized  by  a  tactful 
agent. 

PREDJUDICE   MUST   BE    OVERCOME. 

There  was  a  time  when  all  sorts  of  men  entered  the 
agency  field.  There  were  many  who  were  competent, 
and  transacted  their  business  reasonably  and  judici- 
ously, but  there  were  others  who  were  irresponsible 
enthusiasts,  brazen-faced  adventurers,  or  insufferable 
bores.  Such  men,  nowadays,  could  not  succeed  even 
temporarily,  and  the  reputable  companies  refuse  to 
employ  as  canvassers  those  who  are  not  men  of  respec- 
tability and  standing.  Nevertheless,  the  public  have 
not  forgotten  the  fact  that  formerly  there  were  some 
black  sheep  in  the  business,  and  reputable  agents  some- 
times find  it  hard  to  secure  interviews.  Consequently 
when  you  obtain  access  to  a  busy  man  you  must  be 
able  to  show  in  the  very  beginning  that  you  are  not  a 
bore,  and  that  you  have  no  intention  of  taking  any 


120  THE  SUCCESSFUL  AGENT 

undue  advantage  of  his  courtesy.  Let  him  understand 
that  you  have  come  on  a  business  errand ;  that  you  are 
doing  him  a  service  in  submitting  your  proposition 
to  him,  and  that  you  wish  to  close  a  transaction  with 
him  because  you  know  it  will  be  to  his  advantage. 

Never  permit  a  man  to  get  the  impression  that  you 
have  tricked  him — that  you  have  secured  an  interview 
under  false  pretences.  Nothing  is  more  irritating. 
With  ingenuity  you  can  always  accomplish  your  object 
indirectly  without  giving  offense.  Consider  a  simple 
illustration : 

You  wish  to  reach  a  Mr.  Brown  who  has  been  in  the 
habit  of  frequenting  a  certain  Summer  resort;  or  has 
lived  for  a  long  time  in  a  certain  section  of  the  city; 
or  is  posted  about  a  certain  class  of  investments;  or 
has  expert  knowledge  on  some  scientific  subject.  Get 
a  letter  of  introduction  to  him  from  his  friend  Smith, 
whom  you  already  know,  and  get  him  to  give  you  some 
information  about  the  matter  regarding  which  he  is  a 
recognized  authority.  Carefully  refrain  from  can- 
vassing him  for  insurance,  but  take  pains  to  see  that 
he  knows  before  you  leave  that  you  are  in  the  insur- 
ance business.  Having  thus  secured  the  entree*,  it  will 
be  a  mere  matter  of  time  and  discrimination  as  to 
when  you  can  safely  take  the  second  step  which  shall 
ultimately  lead  to  a  conference  on  the  subject  of  insur- 
ance. 

But  space  does  not  admit  of  further  enlargement 
upon  this  theme.  Enough,  however,  has  been  said 
to  set  you  thinking.  And  if  you  have  any  brains,  and 
if  you  concentrate  your  thoughts  on  this  and  similar 


HOW  TO  FIND  CLIENTS  121 

problems,  you  will  soon  learn  to  solve  every  difficulty 
as  it  presents  itself. 

AN   HONEST   DISGUISE   IS   NOT   A   CRIME. 

Many  men  who  need  insurance  are  so  ignorant  about 
it,  or  so  prejudiced  against  it,  that  they  would  regard 
it  as  a  sheer  waste  of  time  to  give  you  the  chance  to 
talk  on  that  subject.  Hence,  it  is  important  for  you 
to  awaken  their  interest  or  curiosity. 

It  is  not  always  necessary  to  describe  what  you  have 
for  sale  as  an  insurance  policy.  You  must  scrupu- 
lously avoid  trickery,  or  any  disingenuous  method  of 
procedure,  but  there  are  a  thousand  ways  of  describ- 
ing many  kinds  of  insurance  without  introducing  the 
word  " insurance" — at  least,  in  the  beginning. 

Many  a  man  who  would  refuse  to  insure  his  life  will 
be  curious  about  an  investment  which  will  provide  a 
fixed  life  income  for  his  daughter.  If  you  can  interest 
a  man  in  the  subject  of  annuities,  you  can  often  lead 
up  to  the  converse  of  an  annuity,  namely,  a  life  policy. 

A  policy  under  which  the  money  at  maturity  re- 
mains with  the  company  and  yields  the  beneficiary 
an  income,  is,  to  all  intents  and  purposes,  a  bond,  and 
may  thus  be  described.  And  there  are  many  con- 
tracts called  "life"  policies  that  are  more  exactly 
characterized  by  some  other  name;  for  after  all,  it  is 
not  a  man's  life  that  is  insured,  but  his  earnings,  or 
his  experience,  or  his  expertness,  or  his  investments,  or 
his  estate. 


CHAPTER    VI. 
THINGS  TO  DO  AND  TO  AVOID. 

From  what  has  been  said  you  will  see  that  the  things 
which  the  agent  must  not  do  are  quite  as  important 
as  the  things  which  he  must  do. 

Don't  lecture  or  upbraid  your  customer.  "You  can 
catch  more  flies  with  molasses  than  with  vinegar. " 

Always  adopt  a  cheerful  and  encouraging  tone. 
Dwell  more  upon  rewards  than  punishments. 

Don't  bewilder  a  man  by  offering  him  every  variety 
of  insurance  at  once.  Use  your  expert  knowledge 
in  making  a  selection  for  him. 

Never  offer  a  low  premium  policy  with  the  idea  of 
leading  up  to  a  high  premium  policy.  It  is  easier  to 
work  down  to  the  cheaper  contract. 

Don't  offer  an  expensive  policy  to  a  poor  man,  or  a 
long  endowment  to  an  old  man. 

Don't  offer  a  term  policy  to  the  man  who  wants  to 
save  up  money  for  the  future. 

Never  permit  a  customer  to  abandon  a  policy  if  you 
can  help  it.  Never  advise  him  to  exchange  an  old 
policy  for  a  new  one.  Sell  your  insurance,  not  in 
place  of,  but  in  addition  to,  the  insurance  already 
carried.  Remember  that  every  policy  issued  by  a 
solvent  company  grows  in  value  as  it  increases  in  age, 
and  that  it  is  scarcely  better  than  a  confidence  game 
to  "twist"  a  policyholder  from  one  company  into  an- 


THINGS  TO  DO  AND  TO  AVOID  123 

other.  Follow  the  opposite  course.  Congratulate 
your  customer  upon  his  foresight  in  having  insured 
his  life ;  show  him  that  he  needs  more,  and  induce  him 
to  take  the  additional1  policy  with  you.  You  will  thus 
strengthen  your  client's  belief  in  life  insurance,  and 
in  you.  And  your  disinterested  attitude  will  help  to 
establish  your  reputation,  and  secure  the  confidence 
of  other  customers. 

Never  force  a  man  to  buy  more  insurance  than  he 
can  afford  to  carry.  On  the  other  hand,  don't  offer 
him  a  small  policy  if  he  can  maintain  a  large  one,  or 
let  him  escape  you  if  he  carries  a  small  policy  and 
ought  to  have  a  large  one. 

Never  grant  a  rebate.  It  is  better  to  lose  an  individ- 
ual application  now  and  then  than  to  sanction  the 
dangerous  and  pernicious  custom  of  giving  away  part 
of  your  earnings. 

Here  are  a  few  hints  gathered  from  other  publi- 
cations : 

Never  solicit  a  man  until  convinced  that  he  needs 
insurance,  or  until  you  have  good  reasons  to  give 
him  why  he  needs  it. 

Never,  if  you  can  possibly  help  it,  solicit  a  man 
unless  you  know  something  about  him,  the  more  the 
better. 

Rehearse  the  objections  he  may  raise  and  de- 
termine in  advance  how  you  will  meet  them.  Assume 
that  he  will  object,  and  if  he  does  not  so  much  the 
better.  "Faint  heart  ne'er  won  fair  lady,"  nor 
applications  either. 

Sometimes  you  may  get  a  man  examined  by  ex- 
pressing a  doubt  as  to  whether  he  really  can  get 


124  THE  SUCCESSFUL  AGENT 

a  policy;  and  his  assertion  that  he  can  may  be 
followed  up  by  advising  him  to  be  examined  so  as 
to  find  out. 

Everything  you  can  do  to  increase  your  own 
determination  to  get  the  application  will  help 
you.  Keep  physically  well;  loyal  to  your  company; 
convinced  of  the  importance  of  life  insurance;  be 
as  enthusiastic  as  possible  about  your  cause,  and  you 
will  be  just  as  certain  to  increase  your  efficiency  as  a 
clergyman  is  to  preach  more  effectively  if  he  is  en- 
thusiastic and  zealous.  A  sick  man;  a  faint-hearted 
man;  a  man  not  confident  of  his  own  company, 
not  a  firm  believer  in  life  insurance,  will  no  more  get 
applications  than  cold  air  will  melt  iron. 

Don't  shirk  the  things  that  look  difficult  or  un- 
pleasant. They  help  you  in  your  development 
infinitely  more  than  the  easy  things. 

In  canvassing  get  disagreeable  things  out  of  the  way 
as  soon  as  you  can.  It  is  like  having  a  tooth  pulled 
to  pay  the  first  premium;  so  extract  it  as  quickly  as 
possible.  Make  it  easy  for  every  customer  to  pay  his 
second  and  third  premium,  and  all  that  follow.  Do 
not  go  to  him  like  a  collector  dunning  him  to  pay  a 
bill,  but  carry  him  an  encouraging  report  of  your  com- 
pany; congratulate  him  upon  the  value  of  his  invest- 
ment, and  remind  him  that  whenever  he  wants  to  in- 
crease his  insurance  you  will  be  ready  to  procure  it  for 
him.  Make  him  feel  that  in  paying  his  premium  he 
is  not  discharging  a  burdensome  debt,  but  laying 
money  by  for  future  use. 

To  talk  convincingly  you  must  think  clearly.  So, 
cultivate  the  habit  of  thinking. 


THINGS  TO  DO  AND  TO  AVOID  125 

The  man  who  thinks,  moreover,  is  the  man  who 
achieves.  Here  is  what  one  of  the  shrewdest  insur- 
ance men  I  ever  knew  has  said  on  this  subject. 

"It  may  be  that  you  do  not  think  enough — that 
you  are  not  thoroughly  awake.  Some  men  go  all 
through  life  half  asleep ;  others  until  some  tremendous 
event  awakens  them  and  they  develop  their  latent 
energies;  then  the  world  admires  and  respects  what 
is  called  their  genius.  Let  us  give  a  name  to  this 
awakening  and  developing  power.  Call  it  pressure." 

Observe  what  the  same  writer  has  said  about  work : 

"The  most  brilliant  achievements  which  have  been 
wrought  by  man,  and  which  have  elicited  the  admira- 
tion of  the  world,  have  not  been  the  results  of  dreams 
of  indolent  genius,  but  the  outcome  of  conscientious 
unremitting  toil — restless  activity  of  mind,  which  is 
not  satisfied  until  the  best  ways  and  means  are 
ascertained  for  the  accomplishment  of  the  desired 
end ;  and  then  the  resistless  force  which  carries  them 
into  successful  execution." 


CHAPTER    VII. 
TIME  IS  MONEY  TO  THE  AGENT. 

ALWAYS    GET   YOUR   MONEY'S   WORTH. 

Time  is  money  only  in  the  sense  that  it  may  be  util- 
ized in  procuring  money. 

Time  and  money,  instead  of  being  identical,  are  in 
certain  respects  totally  dissimilar.  For  example :  you 
can  hoard  money  (and  thus  become  a  miser)  but  you 
cannot  hoard  time.  You  can  waste  it  or  lose  it,  but 
it  is  a  mere  figure  of  speech  to  say  that  it  can  be  saved. 
You  can  save  time  only  by  spending  it.  This  is  a 
paradox  which  deserves  careful  thought. 

Now,  you  have  just  as  much,  but  no  more  time,  than 
other  people.  You  have  twenty-four  hours  of  time- 
money,  each  day;  and  as  your  mind  and  body  must 
be  fresh  and  alert  if  you  mean  to  succeed,  part  of  each 
twenty-four  hours  must  be  spent  in  sleeping  and  eat- 
ing and  resting. 

It  is  obvious  that  after  these  expenditures  have 
been  made  you  must  lay  out  the  rest  of  your  time  very 
prudently  or  you  will  become  insolvent. 

Many  things,  in  addition  to  energy  and  diligence, 
are  necessary  if  you  are  to  get  your  money's  worth  out 
of  the  time  you  have  to  spend.  These  may  be  classi- 
fied under  the  one  heading,  SYSTEM. 

Organize  your  work,  and  map  out  your  annual  cam- 
paign. At  the  end  of  each  month  review  what  you 
have  accomplished,  and  make  a  definite  plan  for  the 


TIME  IS  MONEY  TO  THE  AGENT  127 

succeeding  month.  Follow  the  same  course  from  week 
to  week,  and  plan  every  day's  work  in  advance  as 
thoughtfully  and  carefully  as  if  you  were  going  into  a 
battle  and  were  in  supreme  command  of  your  forces. 

Carry  a  memorandum  book  in  your  pocket,  and  jot 
down  every  valuable  thought  that  can  in  any  way  help 
you  in  your  work. 

In  addition  to  policy  records,  maturity  records, 
death  claim  records,  etc,  gather  statistics  of  the  finan- 
cial standing  of  those  in  your  community  who  are  un- 
insured or  underinsured.  Gather  information  about 
those  whom  you  intend  to  approach.  Keep  a  sharp 
lookout  for  new  business  combinations,  co-partner- 
ships, marriages,  births,  and  deaths.  All  this  will 
help  you  to  economize  your  time. 

Get  all  the  suggestions  you  can  from  your  company 
and  from  other  agents,  but  be  original  and  resourceful 
and  prosecute  your  work  and  keep  your  records,  in 
your  own  way. 

Avoid  disputes,  which  often  waste  much  valuable 
time. 

Never  raise  objections  merely  for  the  sake  of  knock- 
ing them  down,  or  argue  when  argument  is  superflu- 
ous. You  can  waste  a  great  deal  of  time  in  proving 
to  a  man  that  life  insurance  is  a  good  thing ;  that  you 
represent  a  good  company,  and  that  you  have  a 
good  policy  to  offer,  if  your  customer  already  recog- 
nizes these  facts  and  holds  back  simply  because  he  is 
not  ready  or  willing  to  pay  the  premium.  In  such  a 
case,  if  you  concentrate  your  attention  on  that  one 
difficulty,  and  remove  it,  the  battle  will  be  won. 


128  THE  SUCCESSFUL  AGENT 

Don't  talk  too  much.  If  one  argument  out  of  a 
hundred  will  suffice,  save  your  time  and  the  remaining 
ninety-nine  arguments  for  subsequent  use.  Get  in 
touch  with  your  customer.  Let  him  do  some  of  the 
talking — especially  at  the  start — then  you  will  know 
how  to  deal  with  his  case.  If  he  has  some  objection 
to  advance — especially  if  he  exhibits  any  heat — let 
him  exhaust  his  fire  before  you  (so  to  speak)  get 
within  range. 

Then,  instead  of  returning  his  fire,  and  shooting 
him  down,  you  will  be  able  to  capture  him. 

It  is  a  waste  of  time  to  offer  insurance  to  a  man  until 
you  are  prepared  to  submit  a  sound  business  propo- 
sition, which,  if  understood,  cannot  but  appeal  to  his 
judgment. 

To  save  your  own  time,  and  that  of  your  customer, 
prepare  yourself  for  an  interview  as  a  lawyer  gets  ready 
to  plead  a  cause.  It  is  better,  and  less  embarrassing 
to  say,  "At  your  age,  a  twenty  year  endowment  policy 
for  $10,000  will  cost  you  so  much  and  will  accomplish 
such  and  such  results, "  than  to  ask  a  man  how  old  he 
is,  what  kind  of  insurance  he  prefers,  how  his  business 
is  panning  out,  what  his  resources  are,  how  much  he 
can  afford  to  buy,  whether  he  has  any  dependents  or 
not,  etc.,  etc. 

Find  out  in  advance  every  customer's  age,  financial 
rating,  occupation,  business  and  family  connections, 
personal  peculiarities,  etc.,  etc.  Discover  if  you  can 
whether  he  needs  the  largest  amount  of  protection  at 
the  lowest  cost,  or  a  policy  by  means  of  which  he  can 
lay  by  money  for  his  own  future  support. 


TIME  IS  MONEY  TO  THE  AGENT  129 

A  man  who  does  not  need  insurance  may  be  inter- 
ested in  a  safe  channel  for  the  investment  of  surplus 
funds,  or  in  a  policy  that  will  furnish  ready  money  for 
the  settlement  of  his  estate  at  his  death,  or  that  will 
create  a  fund  for  the  endowment  of  some  benevolent 
object.  But  you  will  not  insure  such  a  man  if  you  do 
your  talking  first  and  discover  his  needs  and  circum- 
stances afterwards. 

Spend  your  time  only  for  a  pecuniary  equivalent. 
Save  it  when  you  observe  that  the  return  will  be  in- 
adequate. 

Delegate  to  others,  as  far  as  possible,  work  that  does 
not  demand  your  personal  attention. 

Remember  that  it  is  easier  to  insure  one  man  for 
$50,000  than  fifty  men  for  $1,000.  But  gather  in  the 
$1,000  cases  as  you  go  along.  Map  out  your  work,  as 
far  as  possible,  in  advance;  but  always  be  ready  to 
pick  up  business  that  comes  your  way  unexpectedly. 

Go  first  for  the  biggest  man  and  the  biggest  amount  ; 
after  that  it  will  be  easier  to  succeed  with  smaller  men 
for  smaller  amounts. 

Other  things  being  equal,  pick  out  the  cases  that 
will  produce  adequate  returns  with  the  least  expendi- 
ture of  time  and  labor. 

Never  stop  halfway ;  your  time  will  be  wasted  if  the 
application  remains  unsigned  and  the  premium  un- 
paid. 

Never  solicit  poor  risks.  Your  time  is  too  valuable 
for  blunders  of  that  kind.  Besides,  it  is  embarrassing 
to  tell  a  man  that  the  contract  you  have  proposed  can- 
not be  carried  out. 


130  THE  SUCCESSFUL  AGENT 

Never  permit  a  man  who  has  taken  a  policy  to  give 
it  up.  Deserters  usually  go  over  to  the  enemy. 
Gather  a  solid  army  of  policyholders  round  you,  and 
they  will  help  you  fight  your  battles. 

Finally,  never  let  failures  or  blunders  discourage 
you.  Consider  their  educational  value.  Turn  them 
to  account  and  thus  save  future  time  and  trouble. 

DON'T  BE  SIDE-TRACKED   BY  MERE  EXCUSES. 

The  inexperienced  agent  often  mistakes  excuses 
for  arguments.  And  an  old  agent,  unless  he  is  wide 
awake,  is  often  baffled  by  some  new  excuse. 

The  agent  who  formerly  succeeded  because  he  was 
(to  use  a  slang  expression)  "on  to  the  curves"  of  the 
people  whom  he  approached,  may  now  fail  simply  be- 
cause he  does  not  know  how  to  meet  new  objections. 
In  such  a  case  the  difficulty  is  with  the  agent  rather 
than  with  the  public.  The  agent  who  has  the  courage 
of  his  convictions  overcomes  these  excuses  and  per- 
suades the  applicant  to  take  a  policy.  The  agent  who 
is  timid  or  disheartened  gives  up  the  contest  without 
a  struggle,  and  is  thus  the  cause  of  his  own  defeat. 

Men  have  always  given  excuses  for  not  insuring, 
but,  wittingly  or  unwittingly,  they  conceal  their  real 
motives,  which  are  often  as  follows : 

The  payment  of  a  premium  involves  self-denial, 
and  self-denial  is  difficult. 

Ready  money  is  often  scarce  even  with  well-to-do 
people. 

Most  men  live  from  hand  to  mouth,  and  it  is  con- 
trary to  their  habit  to  make  provision  for  the  future. 


TIME  IS  MONEY  TO  THE  AGENT  131 

Most  men  live  in  the  present  and  fail  to  see  future 
dangers. 

Most  men  exaggerate  the  size  of  a  present  outlay 
when  only  a  future  return  can  be  expected. 

Unfortunately,  if  the  agent  is  lax,  and  is  diverted 
from  his  benevolent  purpose  by  plausible  excuses,  the 
real  difficulties  will  never  be  met  and  overcome.  And 
the  serious  thing  is  that  the  hardship  and  destitution 
and  suffering  which  will  result  will  not  fall  upon  the 
agent  or  upon  the  man  who  refuses  to  insure,  but  upon 
widows  and  orphans. 


CHAPTER    VIII. 
ORGANIZATION    AND    CONCENTRATION. 

As  we  have  seen,  system  is  important  because  it 
saves  time,  but  it  is  important  for  other  reasons. 

No  business  can  be  prosecuted  with  efficiency  with- 
out system,  and  it  is  peculiarly  important  in  a  busi- 
ness which  depends  so  much  on  mental  activity. 

The  happy-go-lucky,  slovenly,  haphazard  agent  is 
usually  a  failure,  whereas  the  agent  who  organizes  his 
business  thoughtfully  and  carefully  usually  succeeds 
even  if  he  is  a  man  of  very  moderate  attainments. 

I  need  not  enlarge  upon  this,  but  it  may  not  be 
amiss  to  touch  upon  one  or  two  kindred  topics. 

CONCENTRATION. 

If  you  organize  your  work  properly  you  can  concen- 
trate your  energies  upon  it  in  a  way  which  will  tell. 
You  can  light  a  fire  by  concentrating  upon  one  point 
the  feeble  rays  of  sunlight,  which,  diffused  about  your 
face,  scarcely  warm  your  cheek. 

MOMENTUM. 

Momentum  is  not  weight  alone  or  motion  alone, 
but  the  force  engendered  by  the  combined  weight  and 
velocity  of  a  body  in  motion. 

You  can  drive  a  tallow  candle  through  a  board  by 
firing  it  out  of  a  gun.  That  illustrates  the  momentum 
due  to  velocity. 


ORGANIZATION  AND  CONCENTRATION  133 

I  once  saw  a  great  steamship,  whose  progress  was 
almost  imperceptible,  carry  away  the  massive  sup- 
ports of  a  great  ocean  pier.  That  illustrated  the 
momentum  resulting  from  weight. 

Combine  with  the  greatest  velocity  the  utmost 
weight,  and  you  have  a  momentum  which  will  be  al- 
most irresistible.  Thus  it  is  that  an  active  agent 
(furnishing  speed)  who  has  a  solid  company  behind 
him  (supplying  the  weight)  may  exercise  an  influence 
which  will  excite  the  wonder  and  admiration  of  those 
who  are  ignorant  of  the  secret  of  his  power. 


If  you  will  to  insure  a  man's  life  there  are  four 
chances  to  one  that  you  will  succeed.  Your  success  is 
sure,  (1)  if  your  will  is  stronger  than  his;  (2)  if  his  will 
is  strong  but  his  opposition  weak;  (3)  if  you  succeed 
in  removing  his  objections  ;  or  (4)  if  he  has  viewed  your 
proposition  favorably  from  the  start. 

You  will  suffer  defeat  only  in  case  you  are  met  by 
the  immovable  opposition  of  a  will  stronger  than 
your  own. 

ENDORSEMENTS  OF  EXPERTS. 


To  sum  up  the  advice  embodied  in  the  last  two 
chapters,  let  me  quote  a  few  paragraphs  from  the 
writings  of  others  who  have  given  expert  opinions. 

GOLDEN   MAXIMS. 

"A  man  who  walks  against  time  accomplishes 
more  than  one  who  starts  out  for  a  morning  stroll. 
He  turns  neither  to  the  right  nor  to  the  left;  takes 


134  THE  SUCCESSFUL  AGENT 

not  only  a  longer  but  a  quicker  step,  and  if  he  loses 
a  little  at  one  point  strains  every  nerve  to  make  it  up 
farther  on." 

"Let  the  problem  be  to  produce  a  given  result. 
Consider  all  the  present  means  of  accomplishing  it; 
go  out  of  the  old  ruts;  think  deeply;  invent  new 
ways;  choose  the  best  plan;  develop  it;  weigh  every 
point;  when  proved,  change  your  anxious  thought  to 
determined  action." 

"I  have  seen  men  who  possessed  ability  and 
capacity  for  hard  work  who  produced  no  results. 
Is  it  that  the  minds  of  such  men  are  not  intent  upon 
their  work  ?  Are  they  in  business  only  as  a  necessity  ? 
Are  they  without  clearly  defined  plans?  Do  they 
lack  persistency  and  continuity  of  purpose?  Their 
failure  answers  'yes*  to  all  of  these  questions." 


"Anything  that  is  worth  doing  at  all  is  worth 
doing  well.  Make  up  your  mind,  with  all  the  lights 
you  have,  as  to  the  ways  and  means  that  you  should 
employ.  Having  decided,  use  the  greatest  system 
in  conducting  your  agency.  Order,  regularity,  and 
system  are  indispensable," 


CHAPTER     IX. 
CONFIDENCE. 

The  sellers  of  gold  bricks  and  green  goods  are  called 
confidence  men  because  they  victimize  people  by  gain- 
ing their  confidence.  But  the  most  dangerous  men 
are  not  bare-faced  swindlers,  but  those  promoters  who 
offer  investments  of  little  or  no  value,  which,  never- 
theless, they  honestly  believe  to  be  meritorious.  Such 
men  carry  everything  before  them  because  of  their 
confidence  in  what  they  have  for  sale.  If  what  has 
little  or  no  value  can  thus  be  sold  through  confidence, 
think  of  the  advantage  you  enjoy  in  having  something 
to  offer  which  is  pre-eminently  valuable — something 
that  you  can  have  absolute  confidence  in  yourself, 
and  which  you  can  offer  with  full  confidence  to  every 
customer. 

If  you  should  ask  me  to  compress  all  the  advice  I 
have  to  give  into  a  single  word,  I  should  select  this 
word — 

CONFIDENCE. 

All  successful  business  is  based  on  it.  Without  it 
no  enterprise  can  succeed. 

You  must  have  confidence  in  yourself. 

You  must  have  confidence  in  the  life  insurance  prin- 
ciple. 

You  must  be  confident  that  the  particular  man 


136  THE  SUCCESSFUL  AGENT 

whom  you  are  trying  to  insure  will  find  the  policy  you 
offer  well  worth  the  money  he  must  pay  to  secure  it. 

And  you  must  give  him  confidence  in  the  company 
back  of  that  policy,  and  in  yourself. 

Just  here  a  difficulty  appears.  How  are  you  to 
know  that  you  have  a  man's  confidence  ?  Most  people 
are  courteous,  and  are  reluctant  to  wound  the  feelings 
of  those  with  whom  they  come  in  contact.  Often- 
times a  man  will  say  that  he  has  not  made  up  his  mind, 
or  that  it  is  not  convenient  to  pay,  or  that  he  wishes 
to  think  the  matter  over  before  deciding.  The  ex- 
cuse he  gives  may  be  perfectly  true,  but  his  chief 
difficulty  may  be  that  he  has  no  confidence  in  what 
the  agent  tells  him.  If  this  difficulty  can  be  removed, 
every  other  obstacle  will  be  swept  away;  but  if  it  re- 
mains the  agent  will  fail,  and  may  never  know  the 
reason  why.  Hence,  the  only  safe  course  is  for  you  to 
so  conduct  yourself,  and  so  handle  your  business,  that 
you  shall  demand,  and  retain,  the  confidence  of  your 
neighbors.  Establish  a  reputation  for  truthfulness, 
integrity  of  purpose,  and  devotion  to  the  interests  of 
your  clients,  and  lay  before  the  public  the  facts  regard- 
ing your  company  in  so  forcible,  and  at  the  same  time 
in  so  moderate  a  fashion  that  its  trustworthiness  will 
be  obvious.  Then  you  will  reap  rich  harvests;  for 
people  will  confide  in  you,  and  follow  your  advice. 

THE  FUTURE  OF  LIFE  INSURANCE. 

Life  insurance,  when  properly  conducted,  is  safe. 
We  have  recently  passed  through  a  period  during 
which  ill  informed  people  have  become  greatly  per- 


CONFIDENCE  137 

turbed.  But  truth  is  mighty,  and  will  prevail.  And 
the  following  opinion,  expressed  by  the  president  of  a 
prominent  company,  is,  in  my  judgment,  eminently 
sound. 

"It  is  due  to  the  hundreds  of  thousands  of  men  in 
the  community  whose  families  depend  on  the  protec- 
tion of  life  insurance,  that  their  confidence,  wherever 
shaken,  should  be  re-established. 

' '  The  recent  revolution  in  life  insurance  has  resulted 
in  a  great  number  of  important  reforms;  and  as  the  fut- 
ure management  of  these  companies  will  be  subjected 
to  the  most  minute  public  scrutiny ;  and  as  I  believe  it 
to  be  the  aim  of  the  officers  and  directors  of  these  com- 
panies to  conduct  the  business  hereafter  with  a  single 
eye  to  the  interests  of  policy-holders,  I  am  sure  that 
there  has  never  been  a  time  when  the  people  have  been 
in  a  position  to  know  more  certainly  than  now  that 
their  investments  with  the  responsible  companies  are 
as  adequately  protected  as  anything  of  human  origin 
can  possibly  be. 

"There  are  many  business  and  professional  men  in 
every  community  who  are  without  capital,  but  whose 
income  is  sufficient  to  permit  them  to  protect  those 
dependent  on  them  in  this  way.  To  such  men  life  in- 
surance is,  in  the  vast  majority  of  cases,  their  only  re- 
source— and  it  is  a  grave  truth  that  if  they  neglect  this 
opportunity  the  chief  injury  will  fall,  not  upon  them, 
or  upon  the  life  insurance  companies,  or  upon  the 
community  at  large,  but  upon  widows,  orphans,  and 
aged  men  and  women." 


CHAPTER    X. 
USE  YOUR  WITS  IN  SELLING  YOUR  POLICIES. 

•      THE   VALUE   OF   ENDOWMENT   INSURANCE. 

To  illustrate  the  advantage  of  getting  together  all 
the  important  facts  about  each  policy,  consider  the 
case  of  a  man  who  is  looking  for  a  safe  investment, 
and  who  takes  little  or  no  interest  in  the  protection 
which  life  insurance  would  give  his  family.  You  can- 
not interest  such  a  man  in  a  life  policy,  but  you  ought 
to  be  able  to  sell  him  an  endowment. 

COST   OF    AN    ENDOWMENT   POLICY. 

The  following  table  shows  the  cost,  under  all  con- 
tingencies, of  a  twenty  year  endowment  policy  for 
$10,000,  issued  at  age  35. 

A  non-participating  policy  is  selected  because  the 
exact  cost  of  a  participating  policy  cannot  be  stated 
in  advance,  since  the  dividend  which  reduces  each 
premium  is  a  variable  quantity.  Hence,  a  non-partici- 
pating policy,  under  which  the  charge  is  fixed  (and 
which,  so  to  speak,  allows  a  dividend  in  advance)  fur- 
nishes the  best  basis  for  illustration. 

From  the  table  it  will  be  seen  that  if  death  occurs 
during  the  first  year,  the  insurance  money,  if  invested 
at  4%,  will  yield  an  income  of  $400,  which  is  equiva- 
lent to  an  annual  income,  thereafter,  of  89%  on, 
$446.20,  the  sum  deposited  by  the  insured.  If  death 


USE  YOUR  WITS  IN  SELLING  YOUR  POLICIES       139 


occurs  during  the  second  year  the  investment  will 
yield  an  annual  income  thereafter  of  44%.  And  so  on. 


20   YEAR    ENDOWMENT   POLICY,  AGE  35. 
Non-Participating.     Premium  $446.20. 


i 

INCOME— 

Money  Invested 

Face  of 

Balance  of 
Profit 

on 
Face  ol 

on  Money 

mp  to  end  of  — 

Policy. 

to  Estate— 

Policy 

invested  if 

if  4% 

death  occurs 

is  real- 

during — 

ized. 

IstYr.  $446.  20 

$10,000 

IstYr.  $9,553.80 

$400 

IstYr.  89.  % 

2d          892.40 

10,000 

2d           9,107.60 

400 

2d        44.  % 

3d       1,338.60 

10,000 

3d           8,661.40 

400 

3d        29.  % 

4th      1,784.80 

10,000 

4th          8,215.20 

400 

4th       22.  % 

5th      2,231.00 

10,000 

5th         7,769.00 

400 

5th       17.7% 

Cth     2,677.20 

10,000 

6th         7,322.80 

400 

6th       14.8% 

7th      3,123.40 

10,000 

7th         6,876.60 

400 

7th       12.8% 

8th      3,569.60 

10,000 

8th         6,430.40 

400 

8th       11.   % 

Oth      4,015.80 

10,000 

9th         5,984.20 

400 

9th         9.8% 

10th      4,462.00 

10,000 

10th        5,538.00 

400 

10th       8.9% 

llth      4,908.20 

10,000 

llth        5,091.80 

400 

llth      8.  % 

12th      5,354.40 

10,000 

12th       4,645.60 

400 

12th      7.4% 

13th      5,800.60 

10,000 

13th        4,199.40 

400 

13th      6.8% 

14th      6,246.80 

10,000 

14th       3,753.20 

400 

14th      6.3% 

15th      6,693.00 

10,000 

15th       3,307.00 

400 

15th      5.9% 

16th      7,139.20 

10,000 

16th       2,860.80 

400 

16th       5.6% 

17th     7,585.40 

10,000 

17th       2,414.60 

400 

17th      5.2% 

18th      8,031.60 

10,000 

18th        1,968.40 

400 

18th       4.9% 

19th      8,477.80 

10,000 

19th        1,522.20 

400 

19th       4.7% 

20th      8,924.00 

10,000 

20th        1,076.00 

400 

20th       4.4% 

140  THE  SUCCESSFUL  AGENT 

The  last  column  in  the  table  shows  the  annual 
income  which  the  investment  will  yield  in  the  event 
of  death  at  any  time  during  the  endowment  period. 
If  the  insured  is  living  at  the  end  of  twenty  years 
he  will  have  paid  $8,924,  and  will  then  receive 
$10,000,  which,  at  4%,  will  yield  an  income  of  $400, 
equal  to  4.4%  on  the  sum  invested. 

This  return  is  larger  than  a  superficial  glance  would 
indicate ;  for  it  represents  the  balance  left  after  paying 
for  the  twenty  years  of  protection  which  the  insured 
has  enjoyed — a  protection  which  (if  taken  by  him  on 
the  term  plan,  the  basis  on  which  fire  insurance  is 
issued)  would  have  cost  him  $179.30  a  year,  or  $3,586 
for  the  entire  period.  It  is  fair,  therefore,  to  describe 
the  return  under  the  foregoing  endowment  policy  at 
maturity,  as  follows: 

Total  premiums  paid $8,924 

Less  cost  of  term  insurance  for  twenty  years        3,586 


Balance  representing  actual  cost 5,338 

Cash  returned  by  company  at  maturity  of 

policy 10,000 


Excess  over  actual  cost $4,662 

THE  ANNUITY  A  VALUABLE  TOOL. 

Get  all  the  information  you  can  about  the  annuities 
issued  by  the  company  you  represent.  Read  at  least 
one  book  on  the  subject,  and  see  what  the  encyclo- 
pedias have  to  say. 

The  sale  of  annuities  forms  an  important  branch  of 
the  business  of  every  life  insurance  company.  But 


USE  YOUR  WITS  IN  SELLING  YOUR  POLICIES     141 

this  is  not  my  reason  for  advising  you  to  study  this 
subject.  I  recommend  it  because  an  annuity  may  be 
used  both  as  an  entering  wedge  and  as  a  weapon  of 
defense. 

AS   AN   ENTERING  WEDGE. 

You  wish  to  insure  the  life  of  Henry  Brown,  but  he 
refuses  to  be  interviewed  on  the  subject  of  life  insur- 
ance. You  have  discovered  that  he  is  50  years  of  age, 
and  have  learned  that  he  is  working  hard  and  making 
money,  with  the  hope  and  expectation  of  retiring  from 
business  at  the  age  of  65. 

You  ask  him  for  the  opportunity  of  explaining  an 
investment  which  will  yield  him  an  income  of  $10,000 
for  life  after  reaching  the  age  of  65,  and  state  that  the 
cost  to  him  will  be  an  annual  deposit  of  $4,110,during 
the  intervening  period  of  15  years. 

Having  secured  an  interview,  and  having  shown  how 
this  marvellous  result  can  be  achieved  by  a  deferred 
annuity,  you  can  either  sell  him  an  annuity  of  that 
kind  (or  of  some  other  kind)  or  you  can,  by  a  natural 
transition,  emphasize  the  advantages  of  an  endow- 
ment policy. 

If  you  have  ingenuity  you  can  devise  an  infinite 
number  of  ways  in  which  some  form  of  annuity  may 
thus  be  used  as  an  entering  wedge. 

AS   A   WEAPON   OF   DEFENSE. 

I  have  said  that  the  agent  must  prepare  for  every 
interview  with  as  much  care  as  a  lawyer  arranges  to 
plead  a  cause.  And  like  the  lawyer,  he  must  be  ready 


142  THE  SUCCESSFUL  AGENT 

for  surprises,  and  must  be  prepared  to  change,  at  a 
moment's  notice,  his  mode  of  attack  or  defense.  But, 
unlike  the  lawyer,  he  will,  as  a  rule,  be  greatly  limited 
as  to  time,  and  will  be  forced  to  win  his  cause  in  as 
many  minutes  as  the  lawyer  has  hours  iri  which  to  de- 
velop his  argument. 

Now,  an  annuity  is  a  good  thing  to  fall  back  upon 
when  you  discover  unexpectedly  that  the  man  whom 
you  have  urged  to  take  a  policy  is  uninsurable,  or  is 
too  old  to  insure;  for  no  examination  is  necessary  in 
connection  with  an  annuity  investment. 

A  life  annuity  is  the  converse  of  a  life  policy.  The 
company  receives  a  large  sum  from  the  investor  and 
returns  a  small  sum,  from  year  to  year,  as  long  as  he 
lives. 

In  the  case  of  a  life  policy,  the  younger  the  insured 
the  larger  the  return.  In  the  case  of  an  annuity  the 
older  the  investor  the  larger  the  return. 

The  Manager  for  the  East  of  one  of  our  American 
companies  told  me  not  long  ago  that  on  one  occasion 
Li  Hung  Chang  asked  him  to  insure  his  life.  For  a 
moment  the  manager  was  embarrassed.  He  knew 
that  Li  Hung  Chang  was  too  old  to  insure,  but  did  not 
wish  to  tell  him  so.  So  he  beat  a  graceful  retreat  by 
explaining  the  large  income  which  the  Chinese  Prime 
Minister  could  obtain  by  investing  in  an  annuity. 

After  you  have  persuaded  a  man  to  insure,  and  he  is 
waiting  expectantly  for  his  policy,  how  much  better 
it  is  for  you  to  go  to  him,  and  instead  of  saying,  "You 
have  been  declined, "  tell  him  that,  although  the  origi- 
nal programme  cannot  be  strictly  followed,  an  invest- 


USE  YOUR  WITS  IN  SELLING  YOUR  POLICIES       143 

ment  can  be  made  with  your  company  which  will  have 
such  and  such  advantages. 

This  subject  is  too  broad  to  be  enlarged  upon  here. 
A  few  facts  and  figures,  however,  will  be  found  in 
Appendix  D,  which  may  be  of  interest  to  you,  pending 
your  more  careful  investigation  of  this  whole  subject. 


CHAPTER     XI. 
THE  RIGHT  POINT  OF  VIEW. 

A   POUCY   IS   AN   ASSET,   NOT   AN   EXPENSE. 

There  are  many  men  who  own  buildings  which  may 
never  burn  down,  but  which  have  been  insured  against 
fire  for  fifty  or  a  hundred  years,  and  which  will  be 
similarly  insured  for  many  years  to  come.  And  yet 
they  expect  never  to  receive  any  return  for  the  premi- 
ums they  pay. 

Most  men  view  life  insurance  from  the  same  point 
of  view.  They  regard  the  premium  as  a  necessary  but 
irksome  expense.  All  this  is  wrong,  and  no  competent 
agent  should  permit  his  customer  to  view  his  insurance 
as  anything  but  a  good  investment;  and  every  premi- 
um as  a  deposit  on  account  of  that  investment. 

If  death  occurs  prematurely  the  investment  will 
yield  an  enormous  return.  If  life  is  prolonged,  it  is 
true  that  the  aggregate  sum  paid  for  the  investment 
may  be  high,  but  there  can  be  no  shrinkage  in  the 
value  of  the  policy  itself,  provided  it  has  been  issued 
by  a  solvent  company.  The  history  of  a  twenty  year 
endowment  given  on  page  139  is  a  good  illustration 
of  this. 

What  is  true  of  an  endowment  policy  is  true,  to  a 
certain  extent,  of  a  life  policy.  The  policyholder  must 
be  made  to  see  that  the  cost  of  his  policy  is  not  to  be 
measured  by  the  aggregate  amount  paid  in  premiums, 


THE  RIGHT  POINT  OF  VIEW  145 

but  by  the  cost  per  annum.  Like  any  other  current 
expenditure  the  man  who  is  earning  an  income  should 
estimate  the  cost  of  his  life  insurance  as  so  much  a 
year.  There  is  nothing  to  be  gained  by  adding  to- 
gether the  butcher's  billspaid  during  a  period  of  twenty 
years ;  and  no  man  has  a  right  to  conclude  that  he  pays 
a  higher  rental  for  a  house  in  which  he  lives  for  twenty 
years  than  for  one  in  which  he  lives  for  ten  years, 
if  the  rate  per  annum  is  the  same  in  each  case. 

The  whole  theory  of  life  insurance  is  that  the  man 
who  lives,  and  is  able  to  earn  an  income,  can  afford  to 
pay  so  much  a  year  for  his  insurance.  Whereas,  if  he 
dies,  and  his  income  is  cut  off,  the  insurance  will  pro- 
vide what  he  can  no  longer  supply,  i.  e.  support  for  his 
dependents.  In  this  sense  all  life  insurance  is  an  in- 
vestment, and  is  properly  so  designated. 

When  the  protection  furnished  by  the  insurance 
is  combined  with  the  element  of  saving,  then  the  policy 
is  in  a  more  literal  sense  an  investment — and  the  com- 
bination is  a  good  one,  notwithstanding  the  opinion 
expressed  by  some  shallow  critics  that  "straight*'  life 
insurance  is  the  only  legitimate  kind.* 

WHEN  IS  A  MAN  ADEQUATELY  INSURED? 

A  building  is  fully  insured,  when,  if  it  burns  down, 
its  total  value  will  be  restored  to  the  owner. 

The  lives  of  few  men  are  fully  insured  in  this  sense. 
There  may  be  good  and  sufficient  reasons  for  this  in 
many  cases:  The  capitalist  may  see  the  wisdom  of 
insuring  his  life  for  a  large  amount,  but  may  not  deem 
it  necessary  to  insure  it  for  its  full  value  as  measured 

*This  topic  is  dealt  with  more  at  length  on  page  191. 


146  THE  SUCCESSFUL  AGENT 

by  his  money-making  ability.  Others  may  not  be 
able  to  save  from  their  incomes  sufficient  money  to 
fully  insure  their  lives.  Hence,  it  is  a  safe  practical 
rule  for  the  agent  to  advise  a  man  to  insure  his  life 
for  as  large  an  amount  as  he  can  conveniently  pay  for, 
and  let  it  go  at  that. 

A  large  majority  of  the  policyholders  of  the  various 
companies  are  insufficiently  insured.  Many  a  man 
who  spends  $5,000  a  year  is  content  with  a  policy  for 
$5,000.  If  he  dies  the  amount  of  the  insurance  (if 
invested  at,  say,  5%,)  will  yield  his  wife  and  children 
the  munificent  income  of  $250  a  year ;  or,  if  they  spend 
the  principal,  they  may  be  able  to  keep  out  of  the  poor- 
house  for  possibly,  two  or  three  years.  Is  that  a  fair 
business  proposition? 

Consider  the  case  of  a  man  who  is  without  capital 
but  whose  income  enables  him  to  spend  $20,000  a  year 
on  his  family.  Is  he  adequately  insured  if  he  carries 
a  policy  for  $10,000  ?  Hardly,  for  $10,000  invested  at 
5%  would  yield  an  income  of  only  $500. 

Consider  the  following  case :  A  man  who  is  without 
capital,  and  who  earns  $4,000  by  his  intellectual  or 
physical  labors,  finds  it  necessary  to  spend,  say,  $3,000 
a  year  for  living  expenses.  Assuming,  that  in  the 
event  of  his  death,  his  family  could  move  to  the  coun- 
try and  live  on  half  the  amount  he  now  spends,  is  it 
not  a  fair  business  proposition  that  he  should  insure 
for  an  amount  which  will  yield  an  income  of  at  least 
50%  of  his  present  expenditures?  If  so,  he  should 
insure  for  at  least  $30,000;  for  that  amount  invested 
at  5%  would  yield  only  $1,500. 


THE  RIGHT  POINT  OF  VIEW  147 

IP  THE   EARNING   POWER   OF   A  MAN'S   CAPITAL   IS   IM- 
PAIRED  HE   SHOULD   INSURE   HIS   LIFE. 

Many  men  of  means  who  need  life  insurance  are 
complacently  ignorant  of  the  fact.  These  are  the 
men  who  have  worked  hard  while  young  and  have, 
laid  by,  as  they  suppose,  sufficient  capital  to  provide 
for  the  future.  Consider  the  case  of  such  a  man :  Let 
us  suppose  that  when  money  was  worth  7%,  he  had 
accumulated  $100,000.  That  amount  of  capital  at 
that  time  earned  $7,000.  As  this  seemed  sufficient, 
he  stopped  saving.  Does  that  man  recognize  the  fact 
that  instead  of  leaving  his  family  an  income  of  $7,000 
they  will  get  (at  4%  or  5%)  only  $4,000,  or  $5,000 
when  he  dies  ?  What  is  such  a  man  to  do  ?  It  would 
not  take  long  for  an  astute  agent  to  advise  him :  He 
must  insure  for  a  sufficient  amount  to  make  good  this 
shrinkage. 

THE  VALUE  OF  LOW  INTEREST  RATES  TO  THE  AGENT. 

Most  men  are  complaining  of  the  prevailing  low 
rates  of  interest,  but  this  is  " money  in  the  agent's 
pocket"  if  he  chooses  to  take  advantage  of  it.  He  can 
show  the  man  who  insured  his  life  twenty  years  ago 
for  $10,000,  that  he  now  needs  $20,000,  or  $30,000  of 
insurance,  first,  because  the  insurance  money  will 
yield  scarcely  more  than  half  the  income  it  was  ex- 
pected to  yield  when  the  insurance  was  taken;  and, 
second,  because  it  now  costs  more  to  live  than  it  did 
twenty  years  ago 


148  THE  SUCCESSFUL  AGENT 

If  good  investments  were  now  yielding  7%  or  8%, 
agents  would  not  be  able  to  induce  capitalists  to  insure 
for  such  large  amounts  as  they  are  willing  to  take. 

SENTIMENT  VS.    BUSINESS. 

There  are  two  ways  of  selling  insurance.  One  is 
to  appeal  to  the  sentiment  of  your  customer ;  remind- 
ing him  of  his  responsibilities;  telling  him  that  it  is 
a  crime  not  to  provide  for  those  dependent  on  him, 
and  pointing  to  the  harrowing  instances  of  misery  re- 
sulting from  neglect  or  procrastination.  This  is  the 
old-fashioned  sentimental  way — but  it  is  obsolete. 

If  you  want  to  insure  a  man's  life  you  must  keep 
him  in  a  good  humor,  and  you  can't  keep  him  in  a  good 
humor  by  dwelling  upon  disagreeable  themes.  Nor 
does  any  man  like  to  be  told  by  a  stranger  that  he  is 
neglecting  his  duty.  Nor  does  it  cheer  him  to  be  told 
that  death  is  staring  him  in  the  face.  Therefore,  I 
advise  you  to  sell  insurance  on  a  strictly  business  basis. 

Modern  life  insurance  has  become  a  mighty  force 
throughout  the  civilized  world  because  it  appeals  to  a 
man's  business  needs.  It  is  the  easiest  way  of  laying 
up  money  for  the  protection  of  his  family,  or  for  his 
own  support  in  after  life.  The  man  who  is  able  to 
save  a  sufficient  sum  from  his  income  to  pay  for  a 
large  policy  can  spend  the  balance  of  his  earnings  with 
out  any  twinges  of  conscience. 

Many  a  man  after  protecting  his  dependents  by 
means  of  life  insurance  has  felt  justified  in  embarking 
in  business  ventures  which  otherwise  he  would  have 
been  afraid  to  consider  for  a  moment. 


THE  RIGHT  POINT  OF  VIEW  149 

Many  a  man  who  has  been  almost  overwhelmed  by 
heavy  losses  has  succeeded  in  extracting  himself  from 
all  embarrassment  by  protecting  his  future,  and  his 
family,  by  insuring  his  life. 

A  man  should  invest  in  life  insurance  just  as  he  in- 
vests in  a  block  of  bonds.  Offer  it  in  that  way,  appeal 
to  his  common  sense  and  business  experience,  and 
you  will  sell  your  wares. 

Permit  me  to  quote  the  following  paragraph  from  an 
earlier  publication: 

Men  are  like  children.  If  the  agent  goes  like  a 
doctor  to  dose  them  with  wholesome  but  bitter 
physic,  they  will  seek  to  avoid  him.  But  if  he  goes 
like  St.  Nicholas,  with  choice  gifts,  they  will  rejoice. 
And  remember  that  you  do  go  laden  with  precious 
gifts.  You  give  capital  to  men  who  are  poor;  give 
them, the  right  to  spend  then-  income  freely;  help  them 
to  pay  off  their  mortgages,  and  strengthen  their 
credit ;  bring  comfort  and  happiness  to  widows  and 
orphans;  educate  children,  and  start  young  men  upon 
then-  business  careers.  There  are  a  thousand  ways  in 
which  you  can  interest  and  delight  men  in  the  subject 
of  insurance  without  preaching  to  them,  or  upbraiding 
them,  or  calling  upon  Death  to  act  as  your  solicitor. 

DANGERS  OF  DELAY. 

Procrastination  is  not  only  the  thief  of  time ;  it  robs 
widows  and  orphans  of  food,  clothing  and  shelter. 

There  are  many  ways  of  talking  to  the  man  who 
hesitates  or  doubts.  Here  is  a  sample  of  what  you 
might  say : 

"Search  your  heart,  and  if  the  reason  you  have  given 
for  not  insuring  is  that  you  are  waiting  until  you  find  a 


150  THE  SUCCESSFUL  AGENT 

company  that  is  ideally  perfect,  you  will  discover  that 
you  have  been  resting  on  a  very  flimsy  excuse.  The 
day  of  miracles  is  past.  You  can  camp  by  the  Red 
Sea  if  you  choose,  but  you  will  wait  forever  for  a 
chance  to  walk  dry-shod  to  the  opposite  shore. 

"If  you  wait  for  ideal  conditions  you  will  wait  in 
vain. 

"Hawthorne  tells  the  story  of  a  man  whose  young 
wife  was  without  flaw  except  for  a  single  inconspicu- 
ous blemish — a  mere  speck  on  her  cheek.  It  was 
really  no  disfigurement,  but  it  annoyed  the  husband; 
for  to  that  extent  ideal  perfection  was  lacking.  He 
was  a  learned  chemist,  and  resolved  to  get  rid  of  the 
offending  spot.  Finally  he  succeeded  in  distilling 
an  elixir  which  proved  efficacious.  From  day  to  day 
as  she  drank  the  elixir  the  blemish  faded  from  her 
cheek.  The  husband  was  exultant,  and  was  so  ab- 
sorbed in  the  success  of  his  experiment  that  he  failed 
to  observe,  until  it  was  too  late,  that  the  elixir  was  also 
sapping  her  strength.  And  at  the  moment  that  the 
spot  disappeared  she  expired. 

"While  you  are  waiting  for  perfection  in  life  insur- 
ance the  future  of  your  loved  ones  may  be  in  peril. 

"You  know  that  the  fire  insurance  companies  have 
heavy  expenses  and  that  their  premium  charges  are 
high,  but  do  you,  on  that  account,  leave  your  property 
unprotected  ? 

"The  mariner  does  not  throw  his  compass  overboard 
because  at  times  the  needle  may  be  slightly  deflected. 
Nor  does  he  cut  his  cable  because  his  anchor  may  not 
hold  firmly  on  all  bottoms.  Nor  does  he  throw  his 
watch  away  because  sometimes  it  needs  regulating. 
Surgeons  are  necessary,  although  surgical  operations 
are  not  always  successful.  Banks  are  sometimes  mis- 
managed, but  we  use  them  constantly.  Life  insurance 
is  a  business  necessity ;  and  the  necessity  is  immediate 
in  the  case  of  every  man  who  is  without  capital  to  pro- 


THE  RIGHT  POINT  OF  VIEW  151 

vide  for  his  old  age  or  for  the  support  of  those  depen- 
dent on  him. 

"To  insure  at  any  time,  in  any  company,  may  in- 
volve some  self  denial.  With  your  check  book  in  front 
of  you  the  amount  of  the  premium  under  your  eye 
seems  large,  while  the  amount  of  the  insurance  seems 
small.  (One  of  the  laws  of  perspective  is  that  a  near 
object  looks  large  and  a  distant  object,  no  matter  how 
big  it  may  be,  looks  small.)  For  this  and  other  reasons 
men  procrastinate.  They  believe  in  insurance  but 
they  exhibit  faith  without  works. 

"Do  such  truths  as  these  prick  your  conscience? 
Do  they  make  you  uncomfortable?  Then  exercise, 
forthwith,  the  common  sense  which  directs  your  acts 
in  other  matters.  Give  your  loved  ones  a  fair  deal, 
and  without  delay,  and  you  will  be  happy. 

"The  excuse  that  you  are  waiting  for  perfect  condi- 
tions will  not  avail.  The  only  sound  reason  you  can 
give  for  not  insuring  at  once  is  either  that  you  are  with- 
out money  to  pay  the  premium,  or  that  you  are  an  im- 
paired risk  and,  consequently,  uninsurable. " 


CHAPTER    XII. 

INCIDENTAL  ARGUMENTS. 

Don't  be  content  with  threadbare  arguments.  Be 
original  and  inventive. 

Remember  the  incidental  benefits  resulting  from 
insurance.  Exploit  these  so  that  people  who  have 
turned  from  it  may  be  converted  to  it. 

Think  of  the  hundreds  of  thousands  of  men  who  are 
trying  to  save  and  have  failed  dismally.  Such  men 
can  be  taught  to  save,  and  to  insure  their  savings,  by 
means  of  life  insurance. 

The  extravagant  man,  once  he  is  adequately 
insured,  can  become  a  spendthrift  with  a  clear  con- 
science, provided  he  saves  each  year  from  his  income 
enough  to  pay  his  premium. 

Teach  people  that  you  offer  them  life  insurance — 
not  death  insurance;  that  a  policy  is  a  desirable  pos- 
session, not  a  burdensome  expense;  that  to  insure  is 
not  the  performance  of  a  disagreeable  duty,  but  the 
acquisition  of  a  valuable  asset. 

Show  them  also  that  it  is  life  insurance  in  the  sense 
that  it  renews  life  by  relieving  the  sick  man  of  distress- 
ing anxieties.  Whereas,  the  man  who  has  made  no 
provision  for  his  family  worries  himself  to  death.  In 
this  sense  moreover,  life  insurance  is  also  health  insur- 
ance. The  content  it  gives  "doeth  good  like  a  medi- 
cine." 


INCIDENTAL  ARGUMENTS  153 

APPEAL  TO   SELFISH   MOTIVES. 

You  cannot  appeal  to  the  benevolent  instincts  of 
some  men.  In  such  cases,  appeal  to  their  selfish  in- 
stincts. 

The  man  of  moderate  means  envies  his  wealthy 
neighbors.  Let  him  pay  the  first  premium  on  a  policy 
for  $50,000  and  he  will  instantly  experience  the  satis- 
faction of  becoming  a  capitalist. 

Advise  the  wealthy  man  to  insure  his  fortune. 
"Riches  take  unto  themselves  wings  and  fly  away." 
Of  course  your  customer  will  claim  that  he  is  immune ; 
but  if  you  are  tactful  you  can  show  that  accidents 
happen  in  the  best  regulated  businesses.  And  you 
can  call  his  attention  to  the  fact  that  since  he  is  rich 
he  will  not  find  his  premium  a  burden;  or  an  endow- 
ment policy  anything  but  a  sound  investment — and, 
in  case  of  accident,  it  may  become  (as  it  has  in  multi- 
tudes of  instances)  the  only  means  of  getting  bread  and 
butter  for  the  ex-millionaire  and  his  family.  You  can 
always  point  your  argument  by  citing  the  cases  of  men 
known  to  your  customer  who,  after  accumulating 
wealth,  have  gone  to  pieces — And  in  many  of  these 
cases  you  can  show  that  disaster  came  through  no 
fault  of  the  victims. 

Then  think  of  the  multitude  of  men  who  can  serve 
their  own  selfish  ends  by  insuring  the  lives  of  other 
people — partners  whose  death  would  result  in  pecun- 
iary loss ;  debtors  whose  death  would,  practically,  can- 
cel their  obligations;  employees  whose  experience  or 
skill  has  a  money  value. 

If  a  man  has  a  $10,000  mortgage  on  his  house  he 


154  THE  SUCCESSFUL  AGENT 

will  experience  great  satisfaction  if  he  acquires  a 
$10,000,  endowment  policy,  which  will  in  time  free  his 
real  estate  of  every  encumbrance. 

Why  should  a  selfish  bachelor  fear  the  approach 
of  a  time  when  he  may  be  unable  to  make  money  ?  He 
can  protect  his  future  by  an  endowment  policy  which, 
at  maturity,  can  be  converted  into  an  annuity  that 
will  yield  him  a  liberal  income  as  long  as  he  lives. 

Why  should  a  man  who  wishes  to  leave  his  estate  in- 
tact for  his  heirs,  but  who  also  desires  to  perpetuate 
his  name  and  reputation  by  some  endowment  or 
bequest,  hesitate  as  to  his  course,  when  he  can  pay  a 
premium  out  of  his  income  which  at  his  death  will 
yield  ten,  fifty,  one  hundred,  or  five  hundred  thousand 
dollars  of  capital? 

Why  should  the  man  who  is  forced  to  provide  for 
some  retainer,  set  aside  a  large  slice  of  his  capital  for 
that  purpose  if  he  can  insure  his  life  for  the  benefit  of 
that  dependent? 

Follow  lines  of  thought  such  as  these  and  you  will 
discover  many  novel  ways  of  reaching  men  who  don't 
believe  in  life  insurance,  but  who  can  be  made  to 
believe  in  it  and  be  induced  to  buy  it. 


CHAPTER    XIII. 

FALLACIES    THAT    MUST    BE    DEMOLISHED. 

The  popular  errors  which  the  agent  must  be  ready 
at  all  times  to  combat  would  fill  several  volumes.  I 
shall  touch  upon  only  a  few  by  way  of  illustration. 

That  a  man  can  insure  himself.  There  are  several 
ways  of  getting  across  a  river,  but  no  man  ever  lifted 
himself  over  by  his  own  boot  straps.  There  are  sev- 
eral ways  of  securing  the  protection  of  life  insurance, 
but  no  man  ever  succeeded  in  insuring  his  own  life. 
Life  insurance  is  based  on  averages,  and  there  is  no 
such  thing  as  an  average  of  one.* 

That  a  man  can  take  better  care  of  his  money  than  any 
insurance  company.  He  can  if  he  has  exceptional 
opportunities,  and  if  he  has  infallible  judgment,  and 
if  he  could  be  sure  of  long  life.  But  these  ifs  can  never 
be  eliminated  except  by  life  insurance.  No  man  has 
ever  been  able  to  take  care  of  his  money  after  his 
death,  or  to  earn  money  by  post-mortem  exertion. 

That  a  man  can  invest  his  own  money  more  profitably. 
Not  if  death  intervenes,  nor  unless  he  has  opportunity, 
experience,  and  aptitude.  And  most  men  fail  to  make 

*See  chapter  II. 


156  THE  SUCCESSFUL  AGENT 

small  savings  fruitful.  The  insurance  company,  on 
the  other  hand,  consolidates  in  one  large  investment 
fund  the  small  savings  of  many  individuals,  and  thus 
obtains  special  facilities  for  causing  money  to  breed 
money. 

That  a  man  should  put  all  his  savings  into  his  busi- 
ness. But  it  is  seldom  wise  to  put  all  your  eggs  into 
one  basket.  Besides,  the  object  of  insurance  is  not 
to  make,  but  to  protect  money ;  not  to  stimulate  trade, 
but  to  guard  business  interests.  Insurance  does  not 
take  the  place  of  a  man's  business  enterprises,  but  it 
often  renders  those  enterprises  safe  and  successful. 

That  a  savings  bank  is  better.  Not  if  death  inter- 
venes. One  man  puts  $200  in  a  bank  and  another 
pays  a  premium  of  $200  for  a  $10,000  policy.  Both 
die.  Which  has  made  the  best  use  of  his  money? 
The  one  whose  family  receive  $200  plus  a  little  interest, 
or  the  one  whose  family  receives  $10,000  ? 

That  the  man  who  insures  is  a  gambler.  The  gam- 
bler is  the  man  who  does  not  insure.  He  is  betting 
against  death,  and,  sooner  or  later,  will  lose. 

Insurance  removes  the  gambling  element  from  life. 
You  can  gamble  about  the  fate  of  the  individual,  but 
the  company  triumphs  over  the  uncertainties  of  life 
by  so  combining  a  multitude  of  individuals  as  to  secure 
broad  averages,  producing  scientific  uniformity,  thus 
eliminating  chance. 

But  the  applicant  may  say,  "  In  my  case  it  will  be  a 


FALLACIES  THAT  MUST  BE  DEMOLISHED         157 

gamble  whether  I  pay  much  or  little  for  my  insurance." 
This  you  can  grant  for  the  sake  of  argument,  for  you 
can  call  the  applicant's  attention  to  the  fact  that  his 
insurance  cannot  cost  more  than  so  much  a  year,  and 
in  the  event  of  early  death  will  prove  a  veritable  bar- 
gain. If  this  is  a  gambling  transaction  it  is  one  of  an 
altogether  innocent  character.  And  it  is  better  that 
he  should  engage  in  an  innocent  form  of  gambling  than 
one  that  is  pernicious.  It  is  better  that  he  should 
gamble  about  the  amount  which  an  investment  made 
for  the  protection  of  his  family  will  cost  than  that  he 
should  stake  the  hearts,  the  prosperity,  the  health — 
perhaps  even  the  life  itself — of  his  wife  and  children. 
For  the  man  who  does  not  protect  his  family  against 
the  accident  of  his  premature  death  is  a  reckless  and 
heartless  gambler,  for  if  he  does  not  win  his  widow  and 
orphan  children  will  be  the  ones  who  will  be  forced  to 
pay  the  stakes,  and  he  will  go  to — heaven,  scott  free. 

That  the  Company  is  inimical  to  the  policy/holder. 
This  is  one  of  the  most  insidious  of  fallacies,  and  the 
agent  who  helps  to  expose  it  in  his  own  community 
will  be  doing  a  great  public  service. 

Every  company  that  is  properly  managed  is  conduct- 
ing its  affairs  for  the  benefit  of  its  policyholders ;  for 
whatever  is  really  advantageous  for  the  company  is 
good  for  the  policyholder,  and  everything  that  is  really 
injurious  to  the  company  hurts  the  policyholder. 

Many  of  the  legislators  who  are  seeking  to  increase 
the  taxes  imposed  upon  insurance  companies  are  them- 
selves policyholders,  and  are  ignorant  of  the  fact  that 


158  THE  SUCCESSFUL  AGENT 

these  taxes  must  ultimately  be  paid  by  them.  Legis- 
lators seem  to  think  that  the  companies  have  some 
separate  source  from  which  taxes  may  be  paid,  and 
that  it  makes  no  difference  to  the  policyholder  whether 
the  company  is  taxed  or  not ;  that  even  if  the  company 
should  be  victimized  the  policyholder  would  go  scott 
free.  If  they  knew  they  were  taxing  themselves  they 
would  act  very  differently.  Men  are  keen  enough 
about  avoiding  the  payment  of  direct  taxes,  and 
when  they  discover  that  in  permitting  insurance  com- 
panies to  be  taxed  they  are  taxing  themselves,  they 
will  exert  an  influence  which  will  be  potent  to  sweep 
this  evil  away. 

It  is  a  curious  fact  that  most  of  the  laws  enacted  for 
the  benefit  of  policyholders  carefully  protect  the  in- 
terests of  those  who  are  inconstant,  and  leave  stead- 
fast policyholders  to  shift  for  themselves. 

The  companies  if  let  alone,  while  dealing  fairly  with 
retiring  policyholders,  would  be  chiefly  solicitous 
about  continuing  members.  And  this  is  as  it  should 
be. 

Agents  throughout  the  country  will  perform  a 
valuable  public  service  if  they  will  unite  in  teaching 
the  public  that  life  insurance  will  be  cheaper  and  bet- 
ter, and  more  satisfactory  in  every  respect,  if  policy- 
holders,  agents,  and  companies,  work  together  for  the 
common  good,  instead  of  working  at  cross  purposes. 

That  insurance  is  an  expensive  luxury.  There  are 
many  men  who  are  so  unfortunate  as  to  be  unable 
while  still  living  to  support  themselves  or  their 


FALLACIES  THAT  MUST  BE  DEMOLISHED         159 

families.  Such  men  cannot  be  expected  to  make  pro- 
vision for  the  future,  or  for  the  protection  of  wife  and 
children  after  they  are  taken  away.  The  agent  may 
well  sympathize  with  such  people,  but  he  cannot  do 
business  with  them. 

But  when  a  man  who  has  money  to  spend  makes 
the  excuse  that  he  can't  afford  to  insure,  or  finds  it  so 
hard  to  pay  his  current  bills  that  he  can't  pay  a  prem- 
ium, ask  him  how  he  expects  his  family  to  meet  these 
obligations  if  he  should  be  taken  away.  The  man  who 
finds  it  hard  to  pay  current  expenses  is  the  man  who 
is  most  in  need  of  insurance,  and  will  become  the  most 
appreciative  of  your  customers  if  you  deal  wisely  with 
him. 

That  premiums  are  enormously  high.  This  fallacy  is 
so  widespread  and  insistent  at  the  present  time  that  the 
question  calls  for  more  extended  consideration  than 
can  be  given  to  it  here.  Hence  I  have  discussed  it  in 
Appendix  F,*  and  commend  the  facts  there  stated 
to  the  careful  consideration  of  every  agent. 

That  all  Insurance  is  costly.  The  premiums  charged 
ior  certain  kinds  of  insurance  are  high,  and  ignorant 
people  have  jumped  to  the  conclusion  that  therefore 
all  insurance  is  expensive.  But  many  of  the  policies 
issued  by  the  representative  companies  are  very  inex- 
pensive. This,  and  several  kindred  topics  are  dealt 
with  in  Appendix  F.* 


*See  page  187. 


160  THE  SUCCESSFUL  AGENT 

That  the  man  who  means  to  insure  can  afford  to  wait. 
Procrastination  is  the  agent's  chief  enemy.  Put  that 
thief  out  of  business  and  your  treasure  will  accumu- 
late rapidly.  I  shall  not  waste  time  by  puncturing 
the  innumerable  specious  arguments  which  men  ad- 
vance simply  to  put  the  agent  off.  The  young  agent 
will  soon  know  them  all  by  heart,  and  will  find  that 
to  successfully  combat  them  he  will  need  all  the 
weapons  in  his  arsenal — common  sense,  tact,  wit,  wis- 
dom, good  temper,  patience,  perseverance,  will,  and 
the  rest. 


CHAPTER     XIV. 
THE  GENERAL  AGENT. 

HIS   DEVELOPMENT. 

The  best  way  to  become  an  efficient  general  agent  is 
to  begin  at  the  bottom  and  work  up. 

You  must  know  how  to  canvass  before  you  can  be- 
come a  competent  manager. 

You  must  be  a  competent  agent  yourself  before  you 
can  become  a  successful  employer  of  agents. 

It  is  conceivable  that  a  successful  general  agent  may 
be  found,  now  and  then,  who  has  never  learned  how 
to  canvass,  and  who,  nevertheless,  has  the  faculty  of 
gathering  about  him  a  body  of  efficient  workers;  but 
the  only  general  agents  that  I  have  known  who  have 
achieved  conspicuous  success — and  I  have  known 
many — are  those  who  have  been  productive  canvas- 
sers, who  have  been  able  to  go  out  with  young  agents 
and  teach  them  how  to  work;  who  have  known  how 
to  come  to  the  rescue  of  subordinates  who  have  carried 
negotiations  to  a  certain  point  and  have  then  stuck 
fast ;  who  have  been  able  to  fill  their  subordinates  with 
courage  and  enthusiasm  by  visiting  their  districts 
and  writing  applications  where  they  have  failed ;  who 
have  been  able  to  prove  to  sluggish  or  inefficient 
canvassers  that  their  lack  of  success  has  been  due 
not  to  unfavorable  conditions,  but  to  their  own  short- 
comings. 


162  THE  SUCCESSFUL  AGENT 

ORGANIZATION    AND   SYSTEM   ESSENTIAL. 

All  that  I  have  said  about  organization  and  system 
regarding  the  work  of  the  canvasser  applies  with  aug- 
mented force  to  that  of  the  general  agent,  because  his 
field  of  operations  is  broader  and  his  problems  more 
complex. 

The  general  agent  must  have  executive  ability ;  be  a 
good  judge  of  character,  and  have  magnetism  and  en- 
thusiasm. 

He  must  win  the  confidence  and  esteem  of  the  men 
he  employs,  and,  while  protecting  himself,  must  aid 
them  in  making  their  business  profitable. 

If  he  has  capital  he  must  utilize  it.  If  not,  he  must 
establish  his  credit,  so  as  to  obtain  funds  on  favorable 
terms  with  which  to  develop  his  business. 

He  must  establish  not  only  a  reputation  for  personal 
integrity,  but  must  see  to  it  that  the  men  he  employs 
are  worthy  of  confidence,  and  transact  their  business 
in  the  right  way. 

If  he  is  shrewd  he  will  succeed  in  advertising  his 
business  in  such  a  manner  as  to  insure  an  adequate 
return  for  all  the  money  he  disburses. 

It  should  be  the  ambition  of  every  canvasser  to  be- 
come a  general  agent ;  and  if  he  has  the  right  qualities 
he  will  succeed,  for  he  will  always  find  plenty  of  room 
at  the  top. 

IMPORTANCE   OF  THOROUGH   CULTIVATION. 

Perhaps  the  most  important  piece  of  advice  I  can 
give  the  canvasser  who  has  developed  into  a  general 


THE  GENERAL  AGENT  163 

agent  is  this :  See  that  the  field  under  your  charge  is 
cultivated  thoroughly. 

You  can  get  more  money  out  of  a  small  district  if 
you  develop  all  its  resources  than  out  of  a  large  terri- 
tory which  you  do  not  adequately  cover ;  just  as  you 
can  get  more  money  out  of  a  small  garden  or  farm  well 
cultivated,  than  from  a  large  one  half  cultivated. 

It  costs  more  in  time,  labor,  and  money  to  cultivate 
a  large  field  than  a  small  field.  Hence  a  liberal  return 
from  a  small  field  pays  better  than  a  meagre  return 
from  a  large  field.  If  you  richly  fertilize  a  small  plot 
it  will  bear  abundantly.  If,  on  the  other  hand,  you 
spread  your  fertilizer  thin  over  a  large  tract  it  will  be 
wasted. 

The  best  plan  in  starting  an  agency  is  to  cultivate 
a  small  field  round  a  convenient  center  and  gradually 
take  in  more  ground  as  you  are  able  to  extend  your 
organization. 

Inthisconnectionasuccessful  agent  gives  this  advice : 

"First  organize  your  work.  No  matter  whether 
your  territory  extends  over  several  states,  or  several 
counties,  or  if  it  is  confined  to  a  single  city  or  some 
country  town ;  organize  your  work  and  make  up  your 
mind  whether  or  not  you  will  endeavor  to  accomplish 
the  task  which  is  before  you,  and  whether  you  will,  by 
every  means  in  your  power,  not  only  endeavor  to  suc- 
ceed, BUT  SUCCEED." 

CHARACTERISTICS  OF  THE  SUCCESSFUL  GENERAL  AGENT. 

The  successful  general  agent  (whether  the  field  of 
his  operations  be  large  or  small)  is  the  man  whose  com- 
pany is  well  and  favorably  known  wherever  he  has 


164  THE  SUCCESSFUL  AGENT 

jurisdiction.  Who  is  himself  known — by  reputation 
at  least — in  every  town,  village  and  hamlet  within  his 
field.  Whose  agents  are  the  representative  men  in 
their  several  communities.  Whose  customers  are  the 
prominent  men  throughout  his  field.  Whose  busi- 
ness is  done  largely  with  men  who  are  already  policy- 
holders  in  his  company.  Who  is  able  to  reach  new 
customers  through  the  friendly  influence  of  old  cus- 
tomers. Who,  in  the  most  remote  corner  of  his  field 
(with  the  information  which  his  local  representative 
is  able  to  furnish)  can  clean  up  a  lot  of  business  during 
a  short  visit,  and  then  go  on  his  way  and  accomplish 
similar  results  elsewhere. 

SUCCESS  BREEDS  SUCCESS. 

Nothing  succeeds  like  success.  The  best  way  to 
advertise  your  wares  is  to  sell  your  goods. 

If  you  have  satisfied  the  fathers  and  grandfathers  in 
your  community,  you  will  capture  their  children  and 
grandchildren. 

If  you  are  diligent,  and  if  your  work  is  comprehen- 
sive and  thorough,  you  will  exemplify  the  lesson  taught 
in  the  parable  of  the  Ten  Talents.  You  will  not  only 
reap  the  profit  resulting  from  the  diligent  use  of  the 
five  talents  entrusted  to  you  in  the  beginning,  but  will 
soon  have  five  other  talents  added  thereto.  And  as 
you  turn  your  capital  and  surplus  over  and  over,  your 
income  will  grow  rapidly  under  the  combined  influence 
of  prudence,  diligence,  enthusiasm,  courage,  brains 
and  compound  interest. 


CHAPTER    XV. 
A  PARTING  SHOT. 

It  is  easier  to  feed  a  soldier  at  the  mess-table  than 
to  condense  his  rations  into  a  small  package  to  be 
carried  in  his  knapsack.  In  the  same  way  it  is  easier 
to  deal  adequately  with  the  broad  subject  of  life  in- 
surance in  a  book  of  many  volumes  than  in  a  compact 
treatise  such  as  this.  But  as  the  agent  must  be  always 
on  the  march  and  has  little  time  for  reading,  I  have 
aimed  at  conciseness ;  and,  without  claiming  that  this 
book  is  the  quintessence  of  wisdom,  I  hope  it  will  be 
found  to  contain  within  a  narrow  compass,  much  that 
will  prove  of  practical  value  to  the  man  in  the  field. 

The  successful  agent  must  always  be  a  contempla- 
tive man.  He  must  do  a  great  deal  of  hard  thinking ; 
but  he  must  be  able  to  think  on  his  feet ;  to  form  his 
judgments  while  moving ;  to  make  up  his  mind  quickly 
and  accurately  when  in  action — like  the  commander 
of  a  battleship,  in  his  conning  tower.  Hence  the  ad- 
vice I  have  given  in  this  book  has  been  suggestive 
rather  than  exhaustive. 

Finally,  if  I  have  made  my  object  clear,  the  reader 
will  by  this  time  have  arrived  at  some  such  conclusions 
as  the  following: 

Advice  which  will  aid  the  canvasser  in  his  work  is  of 


166  THE  SUCCESSFUL  AGENT 

the  kind  that  will  set  him  to  thinking  and  planning. 

The  agent  who  fails  to  assimilate,  and  use  in  an 
original  way,  the  instruction  given  him  by  others, 
will  accomplish  little. 

The  successful  agent  must  be  a  diligent  student  as 
long  as  he  lives ;  he  must  seek  to  learn  something  new 
every  day;  he  must  take  advantage  of  all  the  outside 
help  he  can  get,  but  all  assistance  given  by  others  will 
necessarily  be  incidental  to  the  education  which  hf 
must  give  himself. 

When  all  has  been  said  and  done,  the  best  agent  is 
the  self-made  man.  You  can  gain  from  books  much 
valuable  information  about  swimming,  but  you  will 
never  become  an  expert  swimmer  until  you  get  into 
the  water. 


APPENDIX  A 

THE  COST  OF  INSURANCE  WHEN   PAID  FOR  BY  A 
SINGLE  PREMIUM. 

THAT  IS  WHEN   ONE   I*UMP  SUM  IS   PAID  IN  ADVANCE,  AND    NOTH- 
ING THEREAFTER 

The  following  is  a  simple  method  of  finding  the  cost  of  insur- 
ance when  a  single  premium,  payable  in  advance,  is  charged. 

First  determine  how  much  money  a  certain  numbei  of  men  of 
the  same  age,  who  associate  themselves  together  to  insure  one 
another,  must  pay  into  a  common  fund  in  advance,  in  order  that 
$1  of  life  insurance  may  be  paid  upon  the  death  of  each  member. 
Then  (having  established  a  unit  of  measure  by  determining  the 
rate  for  $1  of  insurance  at  a  given  age)  the  rates  for  larger 
amounts,  and  for  other  ages,  can  be  computed. 

The  net  natural  premium  at  age  40  has  already  been  computed 
(see  page  26)  and  it  would  be  ea*sy  to  compute  the  net  single 
premium  for  the  same  age,  but  here  a  practical  difficulty 
presents  itself.  The  calculation  necessary  to  determine  the 
single  premium  at  that  age  would  require  no  less  than  fifty-six 
separate  computations,  after  which  it  would  be  necessary  to  con- 
solidate and  analyze  the  figures  thus  brought  togethej.  Such  a 
calculation  would  be  long  and  wearisome.  But  if  we  compute 
the  rate  at,  say  90,  only  six  short  computations  will  be  neces-" 
sary,  because  the  847  persons  surviving  at  age  90,  according  to 
the  American  Experience  Table,  (see  page  21)  will  all  die 
within  a  period  of  six  years.  But  here  another  difficulty  arises. 
Men  90  years  old  never  insure  their  lives,  for  the  reason  that  the 
cost  would  be  prohibitive.  Thus  we  are  confronted  by  a 
dilemma.  If  we  select  a  young  age  the  calculation  will  be 
wearisome:  if  we  select  an  old  age  the  rate  will  be  absurdly 
high.  Which  horn  of  this  dilemma  shall  we  accept?  Let  us 
choose  the  second,  and  compute  the  premium  at  age  90;  for  if 


168 


APPENDIX  A 


(overlooking  the  incongruity)  we  can  succeed  in  demonstrat- 
ing that  the  correct  rate  can  be  found  for  age  90,  the  truth 
will  be  evident  that  the  rate  can  be  determined  for  younger 
ages,  although  in  such  cases  the  calculations  will  necessarily  be 
longer  and  more  intricate. 

As  a  matter  of  fact,  rates  have  been  computed  for  all  ages  (see 
page  30). 

Assuming,  then,  that  the  847  men  surviving  at  age  90,  accord- 
ing to  the  mortality  table,  have  decided  to  insure  one  another, 
let  us  see  what  it  would  cost  them  to  do  so. 

PROBLEM. 

What  sum,  as  a  net  single  premium,  must  each  of  the  847  sur- 
vivors at  age  90  pay  in  advance,  in  order  that  a  sufficient  fund  shall 
be  established  from  -which  $1  may  be  paid  upon  the  death  of  each 
one? 

By  referring  to  the  mortality  table  (page  21)  we  find  that 
385  will  die  during  the  first  year ;  hence  $385  must  be  provided 
to  pay  the  losses  of  that  year.  For  the  second  year  $246  must 
be  provided;  for  the  third  year  $137;  for  the  fourth  year  $58; 
for  the  fifth  year  $18 ;  and  for  the  last  year  $3.  Total  $847. 


AGB. 

Year. 

Number  of 
Deaths  Each 
Year. 

Number  of  $1 
Insurances  Payable 
Each  Year. 

90.  . 

1st 

385 

$385 

91 

2d 

246 

246 

92.  . 

3d 

137 

137 

93 

4th 

58 

58 

94  .... 

5th 

18 

18 

95  

6th 

3 

3 

96  

7th 

0 

0 

847 

$847 

But  to  pay  this  $847,  the  members  of  the  association  need  not 
deposit  so  large  a  sum.  All  the  money  they  contribute  must 
be  deposited  in  advance ;  and  as  long  as  any  part  of  it  remains 
in  the  fund  it  will  yield  interest ;  and  whatever  interest  is 
realized  may  be  utilized  in  paying  the  death  losses.  Hence, 


APPENDIX  A 


169 


the  members  need  only  contribute  a  sum  which,  together  with 
the  interest  earned,  shall  be  sufficient  to  pay  the  $847,  as  the 
deaths  occur. 

It  is  usual,  at  the  present  time  among  life  insurance  compan- 
ies to  assume  that  their  funds  will  earn  3%  interest.  More  may 
be  earned,  but  it  is  well,  in  making  calculations  of  this  kind,  to 
be  conservative.  So  we  shall  assume  that  the  money  con- 
tributed by  our  little  association  of  old  men  will  earn  3%. 

To  discover  the  amount  of  interest  which  our  fund  will  earn 
we  must  find  the  3%  discount  of  the  amount  of  money  which 
must  be  paid  out  each  year. 

The  amount  payable  at  the  end  of  the  first  year  ($385)  must 
thus  be  discounted  for  one  year,  which  reduces  it  to  $373.78. 
The  second  item,  ($246)  must  be  discounted  for  two  years, 
reducing  it  to  $231.87.  And  so  on.  Here  is  the  whole  com- 
putation : 


AOB. 

Year. 

Number  of 
Deaths  Each 
Year. 

Discount  at  3%. 

00 
01 
02 
03 
04 
05 

1st 
2d 
3d 
4th 
5th 
6th 

385 
246 
137 
58 
18 
8 

$385 

=  $373.78641 
=    231.87850 
=»    125.37441 
—      51.53225 
=      15.52696 
==»       2.51245 

(1.03) 
$246 

(1.03)a 
$137 

$58 

$18 

(1.03)8 
$3 

(1.03)« 

$800.61107 

170  APPENDIX  A 

The  amount,  therefore,  which  must  be  paid  in  advance,  in- 
stead of  being  $847,  is  a  trifle  over  $800.61.  Or,  to  be  exact 
$800.61107. 

Now,  as  there  are  847  persons  who  must  contribute  this  sum, 
the  share  of  each  will  be  $800.61 107—847  =$0.94523149,  or  a 
trifle  over  94J  cents. 

This  is  the  net  single  premium  at  age  90,  according  to  the 
foregoing  assumptions,  for  $1  of  life  insurance.  And  if  this  is 
the  rate  for  $l,the  rate  for  $1,000  will  be  just  one  thousand  times 
more,  or  a  trifle  over  $945.23.  ($945.23149) 

That  there  may  be  no  doubt  of  the  accuracy  of  this  computa- 
tion, I  append  the  following 

DEMONSTRATION 

847  persons  must  each  pay  $945.23149,  in  advance: 

847  X  8945. 23149  = $800,611 .07203 

Add  3  per  cent  interest  earned  during  year. . .  24,018.33216 

$824,629.40419 
Deduct  385  losses  during  year,  payable  at  end 

of  year 385,000 .  OOOOQ 

Balance  on  hand  at  beginning  of  2d  year $439,629 . 40419 

Add  3  per  cent  interest 13.188.88213 

$452,818.28632 

Deduct  246  losses 246.000 .  OOOOQ 

Balance  on  hand  at  beginning  of  3d  year $206,818 . 28632 

Add  3  per  cent  interest _       6.204 . 54859 

$213,022.83491 

Deduct  137  losses 137.000 .  OOOOQ 

Balance  on  hand  at  beginning  of  4th  year $76,022  . 83491 

Add  3  per  cent  interest 2.280 . 68505 

$78,303.51996 

Deduct  58  losses. 58.000 .  OOOQQ 

Balance  on  hand  at  beginning  of  5th  year $20,303.51996 

Add  3  per  cent  interest _          609 . 10560 

$20,912 . 62556 

Deduct  18  losses 18,000.00000 

Balance  on  hand  at  beginning  of  6th  year $2,912  62556 

Add  3  per  cent  interest 87.37877 

$3,000.00433 
Deduct  3  losses _       3,000 . 00000 

$0.00433* 

*This  fraction  of  one  cent  left  over  can  be  eliminated   by  carrying  the 
figures  representing  the  premium  to   a  greater  number  of  decimal  points. 


APPENDIX  B 

THE  COST  OF  INSURANCE  WHEN  PAID  FOR  BY   A 
LEVEL  PREMIUM. 

Knowing  the  amount  of  the  net  single  premium  which  will 
buy  $1,000  of  life  insurance,  we  can  discover  a  series  of  level 
premiums  (or  annuities)  which  will  buy  the  same  amount  of  in- 
surance, as  explained  below. 

In  order  to  find  a  unit  of  measure,  let  us  assume  that  the  847 
persons  who,  according  to  the  mortality  table,  are  alive  at 
age  90,*  agree  to  pay  into  a  common  fund,  as  long  as 
they  live,  a  level  annual  premium  of  $1  each ;  then  let  us  see  how 
much  money  they  will  thus  contribute,  and  then  see  if  we  can 
discover  how  much  insurance  these  $1  premiums  will  buy. 

Using  the  mortality  table  (page  21)  as  a  guide,  we  find 
that  the  contributions  will  be  as  follows : 


YEAR. 

Number 
of 
Survivors. 

Number  of 

f  1  Premiums 
Paid. 

1st.  .  . 

847 

$847 

2d 

462 

462 

3d.    . 

216 

216 

4th  .... 

79 

79 

5th  

21 

21 

6th  

3 

3 

Total  annual  payments  of  SI  each 

$1  628 

This  computation  shows  that  the  total  amount  contributed  in 
$1  premiums  aggregates  $1,628.  Now  let  us  see  if  we  can  dis- 
cover the  purchasing  power  of  this  fund  by  comparing  it  with 
the  single  premium,  whose  purchasing  power  we  already  know. 

*The  reason  for  taking  this  advanced  age  is  explained  on  page  167. 


172  APPENDIX  B 

This  we  can  do  if  we  can  find  what  single  premium  will  be 
equivalent  to  this  level  premium  of  $1,628. 

To  solve  this  problem  we  must  begin  by  finding  the  "present 
value"*  of  each  of  the  items  in  the  last  column  of  the  foregoing 
table . 

The  present  value  of  the  first  item  ($847)  is  $847,  for  this  item 
is  payable  in  advance  and  no  allowance  can  be  made  for  interest. 
As  the  second  item  ($462)  is  not  due  for  a  year,  it  will  earn  3% 
interest  for  one  year.  Hence  the  amount  must  be  discounted 
for  one  year.  This  is  done  by  dividing  $462  by  1.03,  which  re- 
duces the  item  to  $448.54369.  The  third  item  ($216)  must  be 
discounted  for  two  years.  That  is  to  say,  $216  must  be  divided 
twice  by  1.03,  which  reduces  the  amount  to  $203.60072  The 
fourth  item  must  be  discounted  for  three  years ;  the  fifth  item 
for  four  years,  and  the  last  item  for  five  years.  When  this  cal- 
culation has  been  made  we  discover  that  a  single  premium  of 
$1,592.68  (or,  to  be  more  exact,  $1,592.68666)  is  the  equivalent 
of  the  annual  premium  of  $1,628,  as  the  following  calculation 
proves : 

DEMONSTRATION. 
Present  value  of  $847  payable  in  advance $847 . 00000 

$462 

-  •  462   "    -1  year. . .  .- =   448 .54369 

(1.03) 

$216 
"  216       "  2  years.  .  .- 


(1.03)a 

$79 
79   "    "3  "  ... =    72.29619 


$21 
21       "4  "  ... =    18.65823 


$3 

-=     2.58783 


(1.03)1 


Total $1,592  . 68666 


*The  "present  value"  of  a  sum  payable  in  the  future  is  an  amount  which, 
compounded  at  a  given  rate  of  interest,  will  equal  that  sum  when  the  time 
comes  for  it  to  be  paid.  e.g.  The  present  value,  at  3%,  of  $100  payable 
ten  years  hence,  is  $74.4094;  for  $74.4094  compounded  annually  at  3% 
will  amount  in  ten  years  to  exactly  $100. 


APPENDIX  B  173 

This  computation  shows  that  these  847  persons  would  have 
to  pay  an  aggregate  single  premium  of  $1,592.68666.  Hence 
the  amount  which  each  individual  would  have  to  pay  would  be 
$1.88039;  for  $l,592.68666-r847=$1.88039. 

This  indicates  that  a  single  premium  of  a  trifle  over  $1.88  has 
the  same  purchasing  power  as  a  level  premium  of  $1. 

Now,  we  do  not  know  how  much  a  single  premium  of 
$1.88  will  buy,  but  we  do  know  that  a  single  premium  of 
$945.23149  will  buy  $1,000  of  insurance.* 

Hence  we  can  discover  the  level  premium  equivalent  to  a 
single  premium  which  will  buy  $1,000  of  insurance  by  simply 
finding  out  how  many  times  $1.88039  is  contained  in  $945.23149. 
This  is  $502.68;  for  $945.23149+$!. 88039=4502.68. 

We  now  have  our  equivalent,  and  know  that  the  net  level 
premium  for  $1,000  of  insurance  is  $502.68,  at  age  90.  Know- 
ing this  we  can  find  the  rate  for  any  larger  or  smaller  amount  at 
the  same  age.  And  if  we  can  determine  the  rate  for  age  90,  we 
can,  in  the  same  way,  calculate  it  for  any  other  age.f 

DEMONSTRATION. 

The  fact  that  the  correct  net  single  premium  for  $1,000  of  in- 
surance at  age  90,  is  $945.23  has  been  proved  in  page  170. 

The  following  computation  proves  that  the  correct  level 
premium  is  $502.68. 

•See  page  170. 

tSee  page  33  for  table  of  net  level  premiums. 


174 


APPENDIX  B 


847  persons  must  pay  a  premium  of  1502 . 68  each  for  the  first  year. 

847  X  $502.68  = $425,769.960 

Add  3  per  cent  interest  earned  during  year 12,773.099 

$438,543.059 

Deduct  385  losses  for  1st  year  ($1,000  each)  pay- 
able at  end  of  year 385,000 . 000 

Balance  beginning  of  2d  year $53,543 .059 

462  survivors  must  pay  for  the  2d  year 232,238.160 

Fund,  2d  year $285,781 .219 

Add  3  per  cent  interest  earned  during  year 8,573 . 437 

$294,354.656 
Deduct  246  losses  for  2d  year 246,000.000 

Balance  at  end  of  2d  year $48,354 . 656 

216  survivors  must  pay  for  the  3d  year 108,578.880 

Fund,  3d  year $156,933 .536 

Add  3  per  cent  interest  earned  during  year 4,708.006 

$161,641.542 
Deduct  137  losses  for  3d  year 137,000 .000 

Balance  at  end  of  3d  year $24,641 .542 

79  survivors  must  pay  for  4th  year 39,711 . 720 

Fund,  4th  year $64,353.262 

Add  3  per  cent  interest  earned  during  year 1,930.598 

$66,283.860 
Deduct  58  losses  for  4th  year 58,000 .000 

Balance  at  end  of  4th  year $8,283 .860 

21  survivors  must  pay  for  5th  year 10,556.280 

Fund,  5th  year $18,840.140 

Add  3  per  cent  interest  earned  during  year 565 . 204 

$19,405.344 
Deduct  18  losses  for  5th  year 

Balance  at  end  of  5th  year. .  .  ... $1,405 . 344 

3  survivors  must  pay  for  5th  year .  . ............  1,508 .040 

Fund,  6th  year .  .  $2,913 . 384 

Add  3  per  cent  interest  earned  during  year 87.40 

$3,000 . 786 
Deduct  3  losses  (all  that  remain)  for  6th  and  last 

year 3,000 . 000 

$0 . 786* 


*This  fraction  of  one  dollar  left  over  is  due  to  the  fact  that  the  premium 
employed  in  the  foregoing  calculation  is  stated  at  $502.68,  whereas  the 
exact  premium  is  a  trifle  less,  namely  $502.678428. 


APPENDIX  C 

THE  PURE  ENDOWMENT,  THE  TERM  POLICY,  AND 
THE  ENDOWMENT  POLICY. 

A  pure  endowment  is  paid  if  you  live.  A  term  policy  is  paid  if 
you  die.  An  endowment  policy  is  paid  whether  you  live  or  die, 
and  is  consequently  a  term  policy  and  a  pure  endowment 
merged  in  a  single  contract. 

The  Pure  Endowment.  The  net  premium  on  a  10  Year  Pure 
Endowment  issued  at  age  30,  for  $1,000,  may  be  discovered  in 
the  following  way: 

At  age  30,  there  are,  according  to  the  mortality  table,*  85,441 
survivors.  Of  these  7,335  will  die  during  the  following  ten 
years,  and  will  consequently  receive  nothing;  but,  the  78,106 
persons  who  will  still  be  alive  will  receive  $1,000  each. 

Hence,  if  interest  should  be  disregarded,  $78,106,000  would 
be  needed.  But  as  the  sum  payable  will  not  be  due  for  10 
years,  the  amount  actually  needed  will  (at  3%  interest)  be 


And  each  man's  share  will  be 

$58,118,198.  93-^85,441  =$680.  2144. 

This,  then,  is  the  net  single  premium  for  a  10  year  Pure  En- 
dowment for  $1,000,  issued  at  age  30. 

The  Term  Policy.     The  net  single  premium  on  a  term  policy 
may  be  found  in  the  same  way  that  we  have  already  found  the 

*See  page  21. 


176  APPENDIX  C 

premium  on  a  life  policy,  and  as  the  length  of  the  computation 
is  limited  to  10  years,  we  need  not  select  an  old  age,  such  as  90, 
but  may  conveniently  take  30  (as  in  the  case  of  the  pure  endow- 
ment.) 

COMPUTATION  TO  DETERMINE  THE  NET  SINGLE   PREMIUM  ON  A 
10- YEAR    TERM    POLICY   FOR   $1,000. 

Basis. — American  Experience  Table,  with  3%  interest. 

We  have  seen  that,  of  the  85,441  persons  living  at  age  30, 78,106 
will  be  alive  at  the  end  of  10  years.  Now  these  survivors  will 
receive  nothing;  but  $1,000  of  insurance  must  be  paid  to  each  of 
the  7,335  persons  who  will  die.  Hence  $7,335,000,  must  be 
disbursed  during  the  10  years;  but  as  most  of  this  money  will 
not  be  needed  for  some  time  we  must  take  advantage  of  such 
interest  as  can  be  earned.  We  must  therefore  determine  the 
present  value  of  each  item,  as  follows: 


APPENDIX  C 


177 


YBAR. 

Number 
of 
Deaths. 

Total  of  the 
$1,000  Death 
Claims 
Payable 
Each  Year. 

Computation  of  Present 
Value  of  Each  Item. 
Discount  3%. 

1st 
2d 
3d 
4th 
5th 
Oth 
7th 
8th 
9th 
10th 

720 
721 
723 
720 
729 
732 
737 
742 
749 
760 

1720,000 
721,000 
723,000 
720,000 
729.000 
732,000 
737,000 
742,000 
749,000 
750,000 

$720,000 

=     $699,029.120 
=      679,011.051 
=       661,647.420 
=      645,041.598 

(1.03) 
$721,000 

(1.03)3 
$723,000 

(1.03)« 
$726,000 
(1.03)* 
$729,000 

(1.03)5 
$732,000 

=      613,038.478 
=       599,248.443 
=      585,741.649 
=      574,046.131 
=      562,534.990 

(1.03)8 
$737,000 

(1.03)' 
$742,000 

(1.03)8 
$749,000 

(1.03)9 
$756,000 

(1.03)io 

Total  present  value $6,248,781 .294 


178  APPENDIX  C 

The  net  single  premium,  therefore,  for  each  person  is 
$6,248,781.  294-r85,441=$73.  1356,  or  to  the  nearest  cent, 
$73.14. 

The  Endowment  Policy.  —  The  net  single  premium  for  a  10- 
year  endowment  policy  for  $1,000,  issued  at  age  30,  is  found  by 
simply  adding  together  the  premiums  chargeable  on  the  two 
policies  just  described  ;  for,  as  has  been  stated,  the  endowment 
policy  is  constructed  by  combining  a  pure  endowment  with  a 
term  policy. 

Net  single  premium  on  a  10-year  Pure  Endowment.        1680.2144 
Net  single  premium  on  a  10-year  Term  policy  ......  73.1356 

Total,  being  the  Net  Single  premium  on  a  10- 

Year  Endowment  policy  ...................        $753  .  3300 


Having  discovered  tke  single  premium,  the  level  rate  can  be 
determined  in  the  manner  described  en  page  171  (although 
in  this  case  the  computation  will  be  for  10  years,  and  not  for 
life). 

Such  a  computation  would  show  that  the  net  level  premium 
(equivalent  to  the  single  premium  of  $753,357)  is  $88.96. 


APPENDIX  D 


ANNUITIES. 

The  proper  charges  to  make  for  annuities  are  determined  by 
utilizing  a  mortality  table,  as  in  the  case  of  life  insurance  policies. 

The  people  who  buy  annuities  are  usually  old  men  and 
women,  without  dependents,  who  can  afford  to  sacrifice  their 
capital,  in  consideration  of  receiving  an  increased  income  for  life. 

Consider  the  case  of  a  man  of  60,  who  has  a  capital  of  $15,000. 
Invested  at  4%  this  would  yield  an  income  of  only  $600,  but  if 
it  should  be  sunk  in  an  ordinary  life  annuity  it  would  yield  a 
life  income  of  more  than  double  that  sum;  namely,  $1,300.80 
(over  8|%). 

The  net  rates  for  annuities  can  be  determined  as  readily  as 
the  net  rates  for  insurance  policies. 

EXAMPLE. 

Of  the  100,000  persons  with  which  the  American  Experience 
Table  begins,  69,804  will  be  alive  at  age  50.  Now,  let  us  sup- 
pose that  these  survivors  determine  to  form  an  association  for 
the  purpose  of  paying  each  member  an  annuity  of  $1.*  for  life. 
And  let  it  be  understood  that  the  first  annuity  is  to  be  paid  at 
the  end  of  the  first  year;  the  second  at  the  end  of  the  second 
year,  and  so  on. 

If  we  should  take  no  account  of  interest  the  calculation  would 
be  very  simple,  for  it  would  only  be  necessary  to  add  together 
the  number  of  survivors  at  the  end  of  each  year,  until  the  last 
man  died,  and  the  sum  of  these  items  would  give  the  number  of 
dollars  necessary.  Thus:  Of  the  69,804  original  members,  962 
would  die  before  the  end  of  the  first  year.  Consequently  68,842 
members  would  be  living  at  the  end  of  the  year,  and  $68,842 
would  be  needed  to  pay  the  annuities  for  the  first  year. 

*One  dollar  is  selected  as  a  convenient  unit  of  measure. 


180  APPENDIX  D 

At  the  end  of  the  second  year,  $67,841  would  be  needed.  And 
so  on. 

But,  as  a  matter  of  fact,  the  money  employed  will  earn  in- 
terest, and  in  order  to  give  due  credit  for  this  saving,  the  pres- 
ent value  of  the  sum  payable  at  the  end  of  each  year  must  be 
determined  by  discounting  it  for  the  time  during  which  it  will 
be  in  hand. 

When  this  has  been  done  for  each  year,  and  the  items  have 
been  added  together,  the  total  sum  needed  in  advance  will  be 
seen  to  be  considerably  less  than  the  total  which  will  have  to  be 
paid. 

It  is  not  necessary  to  go  into  this  calculation,  as  the  process 
has  already  been  sufficiently  illustrated. 

Statistics  indicate  that  women  who  buy  annuities  live  a  little 
longer  than  men  who  buy  annuities. 

Hence  female  annuitants  do  not  fare  quite  so  well  as  male 
annuitants.  But  the  difference  is  trifling. 

The  following  table  gives  the  current  rates  for  a  number  of 
ages.  Some  companies  charge  less,  but  the  differences  are 
slight. 

Note  that  the  rates  given  are  loaded  for  expenses.  Hence 
they  are  not  the  net  rates,  but  the  gross  rates  actually  charged 


APPENDIX  D 


161 


GROSS  LIFE  ANNUITY  RATES. 


MALES. 


tt 

PRICE  OP  $100  ANNUITY. 

ANNUITY  PURCHASED 

BY   $1,000. 

» 

f*> 

3 

1100 
Annually. 

$50 
Semi- 
Annually. 

125 
Quar- 
terly. 

Annual 
Payment. 

Semi- 
Annual 
Payment. 

Quar- 
terly 
Payment. 

9 

30 

2,075.60 

2,102.70 

2,116.20 

48.18 

23.78 

11.81 

30 

40 

1,832.60 

1,859.70 

1,873.20 

54.57 

26.88 

13.34 

40 

50 

1,520.50 

1,547.50 

1,561.10 

65.77 

32.31 

16.01 

50 

60 

1,553.20 

1,180.20 

1,193.80 

86.72 

42.36 

20.94 

60 

70 

772.40 

799.40 

813.00 

129.47 

62.54 

30.75 

70 

80 

543.00 

568.00 

580.50 

184.16 

88.03 

43.07 

80 

85 

468.00 

493.00 

505.50 

213.68 

101.42 

49.46 

85 

FEMALES. 


PRICE  OP  $100  ANNUITY. 

ANNUITY  PURCHASED 

EY   $1,000. 

« 

W 

2 

$50 

$25 

Semi- 

Quar- 

3 

$100 

Semi- 

Quar- 

Annual 

Annual 

terly 

Annually. 

Annually. 

terly. 

Payment. 

Payment. 

Payment. 

30 

2,075.80 

2,102.70 

2,116.20 

48.18 

23.78 

11.81 

30 

40 

1,832.80 

1,859.70 

1,873.20 

54.57 

26.88 

13.34 

40 

50 

1,544.00 

1,569.00 

1,581.50 

64.77 

31.87 

15.81 

50 

60 

1,189.00 

1,214.00 

1,226.50 

84.10 

41.19 

20.38 

60 

70 

828.00 

853.00 

865.50 

120.77 

58.62 

28.89 

70 

80 

592  .  00 

617.00 

629.50 

168.92 

81.04 

39.72 

80 

85 

502.  UO 

527.00 

539.50 

199.20 

94.88 

46.34 

85 

NOTE. — For  ages  older  than  85  the  rates  are  usually  the  same  as  for 
age  85.  A  pro  rata  allowance  is  usually  made  for  each  quarter  of  a  year 
elapsed  since  last  birthday.  Some  companies  charge  rates  slightly  more 
favorable  than  those  here  quoted. 


182  APPENDIX  D 

DIFFERENT   KINDS    OF   ANNUITIES. 

As  there  are  different  kinds  of  policies  so  there  are  different 
kinds  of  annuities.  However,  the  ordinary  life  annuity,  des- 
cribed above,  is  the  kind  most  frequently  sold,  because  it  meets 
the  requirements  of  most  investors. 

But  if  a  man  who  has  reached  the  age  of  55  knows  that  he 
will  inherit  a  fortune  when  he  reaches  the  age  of  70,  and  if, 
meanwhile,  he  is  forced  to  subsist  on  the  income  produced  by 
$4,000  (which  at  5%  would  yield  only  $200  a  year)  he  could 
well  afford  to  sink  his  capital  in  a  temporary  annuity ,  to  run  15 
years  and  then  expire;  for  such  an  annuity  would  yield  an 
annual  income  of  $381. 

Consider  the  case  of  another  man  who  has  reached  the  age  of 
50,  whose  circumstances  are  altogether  different.  He  is 
in  active  business,  has  laid  aside  some  capital  and  has  deter- 
mined to  retire  at  65. 

If  he  chooses  to  sink  $22,060  in  a  deferred  annuity,  he  will, 
after  reaching  the  age  of  65,  receive  an  annual  income  for  life 
of  $5,000,  payable  in  semi-annual  instalments  of  $2,500,  each, 
the  first  instalment  payable  fifteen  years  and  six  months  after 
the  date  of  purchase.  Or  if  he  does  not  wish  to  pay  out  so 
large  an  amount  of  capital  all  at  ©nee,  the  same  annuity  can  be 
obtained  by  making  an  annual  deposit,  with  the  company,  of 
$2,055.  These  annual  deposits  (or  premiums)  to  cease  at  the 
end  of  15  years. 

A  Compound  Annuity  gives  a  man  an  admirable  vehicle  for 
laying  something  by  from  year  to  year  for  his  wife  or  his  daugh- 
ter. But  space  does  not  permit  of  further  discussion  of  this 
fruitful  theme. 

Thus  far  I  have  spoken  of  marketable  annuties,  but  the  life 
insurance  companies  constantly  utilize  annuities  in  computing 
the  premiums  on  insurance  policies.  This  branch  of  the  sub- 
ject is  well  worthy  of  the  agents'  study,  but  here  a  single  illustra- 
tion must  suffice. 


APPENDIX  D  183 

In  Appendix  B.  (page  173)  it  was  shown  that  at  age  90 
the  net  single  premium  for  $1,000  of  insurance  is  $945.23,  and 
that  the  equivalent  level  premium  is  $502.68.  Now,  this  level 
premium  is  neither  more  nor  less  than  an  annuity  of  which  the 
single  premium  is  the  present  worth.  In  other  words,  if  a  man 
90  year  sold  could  find  a  company  that  would  sell  him  an  annuity 
without  making  any  charge  for  the  expense  of  conducting  the 
business,  and  if  that  company  should  base  its  annuity  rates  on 
the  American  Experience  Table,  with  3%  interest,  the  price  the 
purchaser  would  be  called  upon  to  pay  for  an  annuity  due*  of 
$502.68,  would  be  $945.23.  In  other  words,  if  he  saw  fit  to  in- 
vest a  capital  of  $945.23  with  such  a  company,  on  the  conditions 
named,  the  company  could  afford  to  pay  him  an  annuity  of 
$502.68  for  life — the  first  payment  in  advance,  and  the  others 
annually  thereafter.  This  is  proved  by  the  following  compu- 
tation which  is  the  converse  of  the  computation  on  page  174. 

PROPOSITION. 

The  847  persons  surviving  at  age  90,  according  to  the 
American  Experience  Table,  agree  to  pay  $945.23  into  a 
common  fund  with  the  understanding  that  each  member  shall 
receive  an  annuity  of  $502.68  for  life;  the  first  annuity  to  be 
paid  in  advance.  That  this  is  adequate  the  following  demon- 
stration shows. 


*When  a  man  buys  an  ordinary  life  annuity  the  first  instalment  of  his 
income  is  paid  one  year  from  the  date  on  which  he  enters  into  the  transaction. 
In  the  case  of  an  annuity-due,  the  annuity  is  not  paid  at  the  end  but  at  the 
beginning  of  the  year.  In  other  words,  when  an  annuity-due  has  been 
bought  the  company  immediately  returns  to  the  annuitant  the  first  instal- 
ment of  his  income.  An  annuity -due  is  seldom  purchased,  but  it  is  a  species 
of  annuity  constantly  used  in  life  insurance  computations,  because  life 
insurance  premiums  are  always  made  payable  in  advance,  and  not  at  the 
end  of  the  year. 


184  APPENDIX  D 


DEMONSTRATION. 

Original  fund  contributed  by  847  members  at 

$945.23  each S800.609.81 

First  Annuity. — (Payable  at  the  beginning  of  the 

1st  year,  to  847  members) 847  X  $502.68  =  425,769.96 


Balance $374,839.85 

Add  one  year's  interest  at  3% 11,245.20 


Fund  at  beginning  of  2d  year $386,085.05 

Second  Annuity. — (Payable  at  beginning  of  2d  year 

to  462   survivors) 462  X  $502.68  =  232,238. 16 

Balance $153,846. 89 

Add  interest 4,615 . 41 

Fund  at  beginning  of  3d  year $158,462.30 

Third  Annuity 216    X  $502.68  =  108,578.88 


Balance $49,883 .42 

Add  interest 1,496 .50 

Fund  at  beginning  of  4th  year.  ..  .  $51,379.92 

Fourth  Annuity 79  X  $502.68  =  39,711 . 72 

Balance $11,668.20 

Add  interest 350 . 05 


Fund  at  beginning  of  5th  year $12,018.25 

Fifth  Annuity 21   X  $502.68  =  10,556.28 

Balance $1,461 .97 

Add  interest 43 . 86 


Fund  at  beginning  of  6th  year $1,505.83 

Sixth  Annuity 3   X  $502.68  =          1,508.04* 


*The  last  item  is  a  trifle  larger  than  the  fund  from  which  it  must  be  paid, 
because  the  items  employed  in  the  calculation  are  $945.23  and  $502.68 
instead  of  the  more  exact  figures  $945.23149  and  $502.6785. 


APPENDIX  E 

EXPECTATION  TABLE. 


Years 
Old. 

EXPECTATION. 

Years 
Old. 

EXPECTATION. 

Years 
Old. 

EXPECTATION. 

Years. 

Years. 

Years. 

10 

48.7 

40 

28.2 

70 

8.5 

11 

48.1 

41 

27.5 

71 

8.0 

12 

47.4 

42 

26.7 

72 

7.6 

13 

46.8 

43 

26.0 

73 

7.1 

14 

46.2 

44 

25.3 

74 

6.7 

15 

45.5 

45 

24.5 

75 

6.  3 

16 

44.9 

46 

23.8 

76 

5.9 

17 

44.2 

47 

23.1 

77 

6.6 

18 

43.5 

48 

22.4 

78 

5.1 

19 

42.9 

49 

21.6 

79 

4.8 

20 

42.2 

60 

20.9 

80 

4.4 

21 

41.5 

51 

20.2 

81 

4.1 

22 

40.9 

52 

19.5 

82 

3.7 

23 

40.2 

53 

18.8 

83 

3.4 

24 

39.5 

54 

18.1 

84 

3.1 

25 

38.8 

65 

17.4 

85 

2.8 

26 

38.1 

56 

16.7 

86 

2.5 

27 

37.4 

57 

16.1 

87 

2.2 

28 

36.7 

58 

15.4 

88 

1.9 

29 

36.0 

59 

14.7 

89 

1.7 

30 

35.3 

60 

14.1 

90 

1.4 

31 

34.6 

61 

13.5 

91 

1.2 

32 

33.9 

62 

12.9 

92 

1.0 

33 

33.2 

63 

12.3 

93 

.8 

34 

32.5 

64 

11.7 

94 

.6 

35 

31.8 

65 

11.1 

95 

.6 

36 

31.1 

66 

10.5 

37 

30.4 

67 

10.0 

38 

29.6 

68 

9.5 

39 

28.9 

69 

9.0 

By  utilizing  what  is  known  as  the  mathematical  theory  of 
probabilities  in  connection  with  the  mortality  table,  actuaries 


186  APPENDIX  E 

have  been  able  to  determine  the  probable  average  duration  of 
life  beyond  any  given  age. 

The  foregoing  is  such  an  expectation  table,  based  on  the 
American  Experience  Table  of  Mortality. 

According  to  this  table  men  who  are  29  years  old  may  expect 
to  live,  on  the  average,  for  36  years ;  and  men  who  are  67  years 
old  may  expect  to  live,  on  the  average,  for  10  years.  This  does 
not  mean  that  any  individual  who  is  29  years  old  has  any  right 
to  expect  that  he  will  live  for  36  years.  He  may  die  tomorrow 
or  may  live  to  be  a  hundred.  The  table  deals  with  averages, 
and  averages  only. 


APPENDIX  F 

POPULAR  FALLACIES. 

That  premium  charges  are  abnormally  high. — Sometimes  a  man 
says,  "I  shall  take  no  insurance  until  the  premiums  now  charged 
are  cut  in  half."  And  not  long  ago  a  New  York  newspaper 
announced  that,  "The  man  trying  to  save  a  little  money  for  his 
family  is  paying  four  times  the  premium  which  would  be  nec- 
essary to  make  the  company  secure."  Such  exaggeration  is 
grossly  misleading.  In  the  first  part  of  this  volume  it  was 
shown  that  if  a  company  offered  insurances  at  less  than  the  net 
premium  (even  if  it  could  conduct  this  business  without  ex- 
pense) it  would  be  offering  it  at  less  than  cost,  and  would  neces- 
sarily become  insolvent  sooner  or  later. 

The  premium  actually  charged  is  the  net  premium  plus  a  load- 
ing for  expenses.  In  some  cases  this  loading  is  not  more  than 
5%  over  the  net  3%  premium,  and  there  are  few  kinds  of  insur- 
ance under  which  the  loading  is  more  than  one  third  of  the  net 
premium.  Now,  as  we  have  seen,  no  company  can  afford  to 
cut  off  the  entire  loading.  Hence,  the  only  possible  saving  that 
can  be  made  is  a  part,  and  that  a  small  part,  of  the  loading. 

If,  in  the  main,  policyholders  have  been  satisfied  in  the  past, 
they  ought  to  be  satisfied  now,  for  the  actual  cost  of  furnishing 
life  insurance  has  increased;  first,  because  the  companies  earn 
a  lower  rate  of  interest;  second,  because  taxes  have  increased 
enormously  (for  these  taxes  must  be  paid  from  the  money  re- 
ceived from  policyholders),  and  third,  because  the  face  value  of 
the  modern  policy  plus  dividends,  does  not  represent  all  that 
the  company  returns.  The  companies  now  extend  to  their 
policyholders  a  great  number  of  expensive  benefits  that  were 
not  formerly  granted ;  and  yet  there  is  no  increase  in  the  charge 
— the  premium  remains  the  same. 

If  a  large  saving  from  economy  in  management  can  be  guar- 
anteed it  will  be  safe  to  reduce  premiums  to  some  extent ;  but  if 


188  APPENDIX  F 

the  companies  should  attempt  to  cut  their  premiums  in  half  it 
would  be  an  act  of  hari-kari;  all  would  fail,  and  in  a  few  years 
not  a  single  company  would  be  left  in  the  land. 

WILL   THE   MAINTENANCE   OF   PRESENT 
RATES   BE   A   REAL   HARDSHIP? 

Many  disinterested  actuaries  are  of  the  opinion  that  the  rates 
charged  to-day  should  be  maintained,  and  that  the  reduction  in 
cost  should  come  to  the  policyholder  altogether  through  an  in 
crease  in  the  return  premium,  or  dividend. 

This  phase  of  the  question,  then,  may  be  summed  up  in  the 
following  paragraph : 

The  real  evil  is  not  that  premiums  are  too  high,  but  that  the 
business  has  been  so  conducted  that  the  dividend  returns  have 
been  less  than  would  have  been  the  case  if  more  scrupulous 
economy  had  been  exercised.  Now,  the  remedy  for  this  is  not 
to  imperil  the  whole  fabric  of  life  insurance  by  cutting  down 
premiums  to,  or  beyond,  the  danger  point,  but  by  conducting 
the  business  in  such  a  way  that  the  ultimate  cost  to  the  policy- 
holder  shall  be  reduced  by  larger  dividends. 

AMERICAN  COMPANIES  CHARGE  LESS  THAN 
EUROPEAN  COMPANIES. 

It  is  the  general  impression  that  the  rates  of  American  com- 
panies are  high,  and  those  of  foreign  companies  moderate.  The 
contrary  is  true.  For  example,  at  age  thirty-five  the  highest 
standard  rate  for  an  ordinary  life  policy  in  the  case  of  an  Ameri- 
can company  is  $28.11  per  thousand.  In  the  London  Life  the 
rate  is  $34.25;  in  the  Gotha  of  Germany,  $29.60,  and  in  L'  Assur- 
ance Generales  of  France,  $30.70.  These  are  all  old  companies, 
and  there  is  nothing  experimental  about  their  business. 

SHOULD   INSURANCE   BE   ESCHEWED    UNTIL 
PREMIUMS    ARE   REDUCED? 

If  a  man  needs  insurance  he  needs  it  now,  If  he  delays  he 
may  leave  his  family  destitute.  If  he  pays  a  little  more  than  is 
necessary  he  will  get  it  back  in  dividends,  if  the  business  is  man- 
aged faithfully. 


APPENDIX  F  189 

A  man  may  sit  a  long  time  by  the  river  waiting  for  the  water 
to  run  by,  or  he  can  exercise  a  little  horse  sense  and  cross  by  the 
bridge.  In  the  same  way  a  man  can  refuse  to  insure  on  the 
ground  that  he  is  waiting  until  premiums  shall  be  cut  in  two, 
but  the  chances  are  that  the  family  of  such  a  man  will  go  to  the 
poorhouse  some  of  these  days. 

That  all  Life  Insurance  is  expensive. — The  first  part  of  this 
book  demonstrates  the  fact  that  life  insurance  companies  charge 
as  nearly  as  may  be,  the  exact  cost  of  the  insurance,  plus  a  load- 
ing for  expenses.  If,  therefore,  the  charge  for  a  certain  kind 
of  insurance  is  seen  to  be  high  the  reason  is  because  it  costs  the 
company  more  to  grant  than  ordinary  insurance.  But  it  does 
not  follow  from  this  that  the  charges  for  all  kinds  of  insurance 
are  high.  The  contrary  is  true.  The  man  who  wants  inex- 
pensive insurance  can  get  it  from  any  reputable  company. 

Consider  a  few  illustrations  of  the  varying  charges  for  differ- 
ent kinds  of  policies. 

EXAMPLES 

An  agent  offers  a  well-to-do  banker,  who  is  forty  years  old, 
an  ordinary  life  policy  for  $10,000  at  an  annual  premium  of 
about  $300.  The  provisions  of  the  contract  are  that  the  banker 
must  pay  $300  a  year  as  long  as  he  lives,  and  at  his  death  the 
company  agrees  to  return  $10,000  to  his  widow.  But  the  banker 
objects.  He  explains  that  his  object  is  to  force  himself  to 
save ;  that  in  fifteen  years  he  expects  to  retire  from  business,  and 
wants  a  policy  that  will  mature  during  his  own  lifetime.  So 
the  agent  gives  him  a  fifteen-year  endowment  policy.  The 
amount  of  the  insurance  is  the  same,  $10,000,  but  the  premium 
would  be  about  $700.  The  policy  costs  more  because  it  is 
worth  more.  But  the  fact  that  the  company  is  willing  to  issue 
one  policy  at  a  high  rate  does  not,  as  we  have  seen,  preclude  it 
from  issuing  another  at  a  lower  rate. 

Take  another  case:  Let  us  suppose  that  the  same  agent 
approaches  a  clerk  twenty-three  years  old,  who  has  a  family 


190  APPENDIX  F 

dependent  on  him,  but  whose  salary  is  small.  The  agent  again 
offers  an  ordinary  life  policy  for  $10,000,  for  which,  at  age 
twenty-three,  the  premium  would  be  about  $200.  But  this 
does  not  suit  the  clerk.  He  explains  that,  upon  the  death  of  a 
wealthy  relative,  he  will  fall  heir  to  a  round  sum  of  money.  If 
he  lives,  therefore,  he  will  not  need  the  insurance,  but  mean- 
while he  needs  it  badly.  Nevertheless,  he  frankly  admits  that 
it  would  be  a  physical  impossibility  for  him  to  pay  the  premium 
demanded.  So  the  agent  offers  him  a  yearly  renewable  term 
policy,  the  first  premium  on  which  is  only  $119.  At  this,  the 
clerk  manifests  some  indignation.  Why  should  the  agent  at- 
tempt to  collect  $200  when  he  can  give  the  same  amount  of  in- 
surance at  a  premium  of  only  $119?  The  explanation  is  simple. 
The  premium  on  the  yearly  renewable  term  policy  will  increase 
from  year  to  year.  For  the  second  year  it  would  be  $120;  for 
the  third  year,  $121,  and  would  become  very  high  late  in  life. 
The  insurance  is  cheap  at  first,  because  it  becomes  expensive 
later  on.  Hence,  it  is  not  an  economical  form  for  a  man  who 
takes  a  policy  with  the  expectation  of  keeping  it  permanently, 
although  it  is  an  economical  policy  for  a  young  man  if  he  simply 
wishes  to  bridge  over  a  temporary  period  of  special  danger. 

All  endowment  insurance  is  expensive,  because  it  couples 
with  the  element  of  protection  the  investment  element.  In  the 
same  way,  a  policy  on  which  the  premiums  are  limited  to  a  fixed 
term  of  years  is  more  expensive  than  one  on  which  premiums 
must  be  paid  for  life.  But  every  company  issues  insurance  of 
one  sort  or  another  which  grants  the  maximum  of  protection 
at  a  minimum  of  expense.  The  following  for  example,  is  a  con- 
tract which  many  reputable  companies  issue:  A  "non-partici- 
pating" policy  for  $10,000,  payable  by  the  company  in  fifty 
annual  instalments.  The  annual  premium  at,  say,  age  twenty- 
one,  is  $84  (or  at  the  rate  of  $8.40  per  thousand).  This  is  ob- 
viously a  very  small  premium.  The  explanation  is  this:  In 
the  first  place,  the  premium  is  less  because  the  insured  must 
relinquish  all  interest  in  profits.  A  low  fixed  premium  is  charged 
in  consideration  of  the  fact  that  the  policyholder  will  receive 


APPENDIX  F  191 

no  dividends.  In  the  second  place,  the  company  will  realize 
Interest  on  the  money  left  with  it  and  will  be  able  to  return  a 
very  much  larger  aggregate  than  it  could  if  the  amount  due  had 
to  be  paid  in  one  lump  sum.  The  premium  is  less,  because  it 
costs  the  company  less  to  fulfill  its  contract. 

That  the  Investment  Element  Should  be  Eliminated  from  Life 
Insurance. — Of  late  there  has  been  a  great  hue  and  cry,  in  cer- 
tain quarters,  against  what  is  known  as  investment  insurance. 

"Let  us  have  nothing  but  straight  life  insurance,"  says  the 
critic.  "Give  us  protection  and  nothing  else!  Down  with  en- 
dowments and  every  variety  of  investment  policy!" 

This,  in  my  opinion  is  unsound.  Endowment  insurance  has 
for  generations  been  recognized  by  all  experts  as  the  best  form 
of  insurance — for  those  who  can  afford  to  buy  it — and  it  is  a 
well-known  fact  that  hundreds  of  thousands  of  widows  and  or- 
phans have  been  rescued  from  want  by  means  of  investment 
policies,  who  would  have  been  left  destitute  if  the  bread-winner 
had  been  restricted  to  a  simple  life  policy.  Why?  Because 
simple  insurance  would  not  have  attracted  him.  He  wanted 
to  save  on  his  own  account,  and  was  glad  to  get  the  protection 
thrown  in,  but  he  didn't  care  for  the  protection  by  itself. 

Wiseacres  say,  "A  man  can  do  better  by  using  part  of  his 
savings  to  buy  straight  life  insurance,  depositing  the  rest  in  a 
savings  bank. "  That  doesn't  necessarily  follow.  A  man  can 
eat  sugar  with  a  spoon  and  afterwards  take  a  bite  out  of  a  lemon, 
but  he  will  find  a  combination  of  these  ingredients — a  lemonade 
— more  palatable.  Besides,  nine  men  out  of  every  ten  spend 
their  savings  after,  or  before,  putting  them  into  the  savings 
bank. 

Advice  is  cheap,  and  it  isn't  worth  much  unless  it  is  practical. 
Men  would  live  longer  if  they  never  drank  or  smoked  or  turned 
night  into  day.  And  if  all  men  were  prudent  and  saving  they 
could  get  along  without  investment  insurance.  But  most  men 
are  heedless  or  extravagant,  and  investment  insurance  has  a 
steadying  and  salutary  influence  on  such  men. 

Why  are  the  great  department  stores  popular  ?     Not  because 


192  APPENDIX  F 

they  stick  to  one  line  of  business.  That  is  precisely  what  they 
do  not  do.  They  combine  different  kinds  of  business,  and  are 
thus  able  to  undersell  their  competitors.  Moreover,  buyers 
find  it  more  convenient  to  do  all  their  shopping  under  one  roof. 
In  the  same  way  life  insurance  has  been  developed  by  combin- 
ing investment  with  protection. 

There  are  a  great  number  of  so-called  investment  policies 
that  are  sound  and  wisely  adapted  to  the  special  needs  of  many 
classes  of  people  who  could  not  be  induced  to  buy  simple  life 
insurance. 

A  straight  life  policy  is  one  on  which  premiums  must  be  paid 
for  life,  and  every  now  and  then  the  companies  receive  letters 
from  old  men,  bitterly  complaining  that  their  policies  have 
become  burdensome.  That  is  because  they  have  straight  life 
insurance.  These  old  men  would  have  nothing  to  complain  of  if 
they  had  taken  "limited  payment"  life  policies.  But  the 
purist  would  protest  at  this.  "That,"  he  would  exclaim, 
"is  not  straight  life  insurance — an  ordinary  life  policy 
will  give  the  same  amount  of  protection  at  a  lower 
annual  charge."  True  enough,  but  that  is  not  the  ultimate 
truth.  The  purist,  to  be  really  consistent,  should  call  for  the 
abolishment  of  "level"  premiums,  and  insist  that  all  life  insur- 
ance should  be  issued  on  the  "natural"  basis,  under  which  the 
premium  pays  the  cost  of  the  protection  year  by  year,  and  in- 
creases as  the  policy  grows  older.  Nevertheless,  few  sensible 
people  want  such  insurance  because  they  don't  like  to  assume 
an  increasing  burden. 

There  are  various  kinds  of  insurance,  because  the  needs  of 
different  people  vary.  Give  straight  life  insurance  to  the  man 
who  wants  it,  but  that  is  no  reason  why  the  man  who  wants  to 
force  himself  to  save  or  who  has  surplus  funds  to  invest,  should 
be  debarred  from  obtaining  investment  insurance. 

And  remember  that,  although  straight  life  insurance  costs 
less  in  cases  where  death  comes  prematurely,  it  costs  more  in 
cases  where  life  is  prolonged.  Hence  this  paradox :  The  cheap- 
est insurance  for  the  man  who  lives  long  is  investment  insur- 
ance, although  the  premium  is  higher.  The  explanation  is  that 


APPENDIX  F  193 

the  ultimate  return  (in  proportion  to  the  amount  paid)  is  so 
much  greater  that,  in  the  majority  of  cases,  the  advantage  is 
largely  in  favor  of  the  more  "expensive"  contract. 

That  Special  Benefits  are  all  important. — The  amateur  re- 
former is  very  solicitous  about  the  policy  holder.  The  policy- 
holder  is  supposed  to  be  a  victim,  and  must  be  protected  even  if 
the  company  suffers. 

But  what  is  the  company?  It  is  simply  an  aggregation  of 
policyholders.  If  you  aim  a  blow  at  the  company,  and  a  wound 
is  inflicted,  whose  blood  will  be  spilt  ?  The  blood  of  the  policy- 
holder. 

Of  course  the  amateur  reformer  is  the  most  benevolent  of  men. 
He  has  forced  the  companies,  for  example,  to  guarantee  large 
early  cash  surrender  values;  to  offer  the  largest  possible  loans 
on  policies;  to  fill  the  policy  contract  with  a  great  number  of 
novel  benefits  (such  as  grace  in  the  payment  of  premiums;  per- 
mission to  engage  in  hazardous  employments  without  charge; 
freedom  to  travel  or  reside  in  the  most  deadly  regions  without 
extra  premium),  and  to  grant  many  other  expensive  luxuries. 
But  careful  scrutiny  will  show  that  most  of  these  benefits  are 
for  the  advantage  of  deserters  or  people  whose  circumstances 
are  exceptional,  and  not  for  those  who  are  the  most  steadfast 
and  deserving  members. 

The  modern  policy  is  infinitely  better  for  the  man  who  deserts 
the  ship  than  was  the  old-fashioned  policy.  But  the  old-fash- 
ioned policy,  although  less  liberal  in  the  beginning,  was  worth 
more  in  the  end  to  the  man  who  maintained  his  contract  until 
its  final  maturity. 

The  man  who  takes  a  policy  for  the  benefit  of  his  family  will 
do  well  to  consider  the  ultimate  value  of  the  investment  rather 
than  its  temporary  value.  Again,  if  he  takes  insurance  for  the 
benefit  of  his  wife  and  children,  or  to  protect  his  own  old  age,  he 
should  consider  whether  it  is  to  his  advantage  to  belong  to  a 
class  whose  members  are  granted  a  great  variety  of  expensive 
benefits  which  he  himself  does  not  want  and  never  will  utilize, 


194  APPENDIX  F 

but  which,  in  the  long  run,  will  cut  down  the  dividends  on  his 
own  policy. 

"You  can't  eat  your  cake  and  keep  it,  too/1  and  if  policy- 
holders  are  disappointed  with  the  dividends  which  the  com- 
panies pay,  they  should  be  forced  to  recognize  the  fact  that  the 
chief  reason  for  the  smaller  dividends  paid  during  recent  years 
is  that  the  money  formerly  stored  up  and  paid  to  those  who  kept 
their  insurance  in  force,  has  recently  been  dissipated  in  paying 
large  surrender  values  to  those  who  have  given  up  their  insur- 
ance prematurely,  or  who  have  received  other  benefits  that 
encroach  upon  surplus. 

That  if  a  Company  is  Solvent  it  Need  do  no  New  Business. — 
It  is  conceivable  that  a  carpet  manufacturer,  could  fulfill  all  ex- 
isting contracts ;  shut  down  his  factory,  and  close  out  his  busi- 
ness without  becoming  insolvent.  But  a  successful  carpet 
manufacturer  is  in  business  not  simply  to  fulfill  existing  obliga- 
tions. He  intends  to  continue  to  sell  carpets.  In  that  way  he  ex- 
pects to  make  money.  If  he  retires  he  may  succeed  in  main- 
taining his  solvency,  but  the  chances  are  that  he  will  sacrifice 
a  great  deal  in  the  process. 

In  life  insurance  new  business  is  equally  desirable.  In  fact, 
it  is  in  a  certain  sense  more  desirable,  for  it  is  needed  not  only 
for  the  prosperity  of  the  company  but  for  the  advantage  of  its 
customers — the  policyholders.  They,  indeed,  are  the  company 
— they  are,  in  a  sense,  partners  in  the  business.  When  a  man 
buys  a  carpet  he  goes  away,  and  the  transaction  is  at  an  end. 
When  a  man  buys  a  policy  he  becomes  a  party  to  a  contract 
that  may  run  for  twenty  or  thirty  or  forty  years.  He  has  an  in- 
terest in  the  future  success  of  the  concern.  His  future  divi- 
dends will  depend  on  the  future  earnings  of  the  company. 

Another  point:  A  manufacturer  who  is  doing  a  large  and 
flourishing  business  must  maintain  an  extensive  plant.  He  must 
invest  capital  in  his  buildings  and  machinery.  And  if  he 
decides  to  go  out  of  business  he  must  get  rid  of  his  plant  before 
he  can  retire  safely.  Thus  it  is  with  a  life  insurance  company. 

From  all  this  it  will  be  seen  that  while  a  company  can  stop 


APPENDIX  F  195 

doing  business,  and  so  reorganize  its  affairs  as  to  pay  the  face 
value  of  every  policy  as  it  matures,  it  is  infinitely  better  for  old 
policyholders  that  the  business  shall  be  continued.  Besides, 
life  insurance  companies  are  organized  to  do  a  life  insurance 
business.  That  is  their  province.  Insurance  is  one  of  the  neces- 
sities of  modern  civilization.  And  if  all  the  companies  should 
close  their  doors  simply  because  they  can  do  so  safely,  it  does 
not  follow  that  such  a  course  would  be  expedient. 


APPENDIX  G 

DEFERRED  DIVIDEND  INSURANCE. 

Few,  if  any,  companies  are  now  issuing  deferred-dividend  poli- 
cies. But  much  of  the  insurance  now  outstanding  in  the 
United  States  is  on  the  deferred-dividend  plan,  and  the  argu- 
ments recently  advanced  against  it  are  being  used  by  the  ' '  twist- 
ing"  agent.  Hence,  every  intelligent  canvasser  should  know 
the  truth,  and  advise  his  clients  accordingly. 

WHAT  IS   A   DEFERRED-DIVIDEND   POUCY? 

The  simplest  way  to  describe  a  deferred-dividend  policy  is  to 
show  how  it  differs  from  an  annual  dividend  policy. 

The  premium  is  the  same.  In  case  of  death  during  the  first 
year  (after  only  one  premium  has  been  paid)  the  return  is  the 
same  in  either  case — neither  will  receive  a  dividend — the  face 
of  the  policy  and  nothing  more,  will  be  paid.  After  that  the 
first  difference  will  appear.  At  the  end  of  the  first  year,  and 
annually  thereafter,  dividends  are  paid  on  annual  dividend 
contracts.  Not  so  with  deferred- dividend  contracts.  Those 
who  select  deferred-dividend  insurance,  must  first  decide  upon 
the  length  of  the  "accumulation  period/'  That  is  to  say, 
they  must  decide  for  how  long  a  period  surplus  shall  be  accu- 
mulated before  the  first  dividend  shall  be  paid.  Those  who 
select  a  20  year  period  will  join  a  class  of  policyholders  who 
agree  (1)  that  all  surplus  earned  on  the  policies  of  that  class, 
increased  by  interest,  shall  be  held  for  20  years  by  the  com. 
pany;  (2)  that  those  who  die,  or  surrender  their  policies 
prematurely,  shall  receive  no  dividends — that  the  beneficiary 
in  each  case  shall  receive  only  the  face  value  of  the  policy ;  (3) 
that  all  the  surplus  shall  be  divided  among  those  who  remain  at 
the  end  of  the  20  years,  and  (4)  that  if  the  insurance  is  con- 
tinued beyond  the  period  aforesaid,  each  policy  shall  receive 
annual  dividends  thereafter. 


APPENDIX  G  197 

ORIGIN   OF   DEFERRED-DIVIDEND   INSURANCE. 

Years  ago  it  was  seen  by  insurance  experts  that  under  the 
annual  dividend  plan  those  who  lived  long  were  compelled  to 
pay  premiums  for  many  years,  making  their  policies  burden- 
some after  a  time;  whereas,  those  who  died  prematurely  (after 
paying,  perhaps,  only  one  or  two  premiums)  left  enormous  re- 
turns to  their  heirs.  Such  inequalities  are  inherent  in  life  in- 
surance, but  it  did  not  seem  necessary  to  magnify  them  by  pay- 
ing dividends  on  the  policies  that  thus  matured  prematurely. 
It  was  seen,  of  course,  that  the  insurance  must  be  paid  in  every 
case,  but  it  was  also  seen  that  no  hardship  or  injustice  would 
follow  if  all  those  who  took  policies  agreed  in  advance  that  in 
cases  where  death  came  quickly  no  dividends  should  be  allowed, 
and  that  all  surplus  earned  should  be  acculumated  and  paid 
only  to* those  who  lived  and  kept  their  policies  in  force;  thus 
providing  a  fund,  not  to  remove,  but  to  lighten,  the  weight  of 
the  necessary  burden  imposed  upon  those  who  lived  long. 

The  deferred  dividend  plan  was  also  devised  to  check  the 
lapsing  which  had  become  very  prevalent  under  the  annual 
dividend  plan.  The  aim  was  to  offer  a  reward  in  the  shape  of  a 
deferred  dividend  so  as  to  make  the  policyholder  more  stead- 
fast. 

Another  objection  to  the  old  annual  dividend  ordinary  life 
policy  was,  that,  until  death  terminated  the  contract,  no  relief 
from  the  burden  of  carrying  it  could  be  looked  for.  That  diffi- 
culty had  been  evaded  in  cases  where  policies  were  issued  on  the 
limited  payment  life  or  endowment  plan.  But  it  was  recog- 
nized that  many  people  could  not  afford  to  take  such  policies. 
It  was  seen,  therefore,  that  it  would  be  of  great  advantage  to 
the  holder  of  a  policy  on  the  ordinary  life  form  if  he  could  be 
given  the  opportunity  of  terminating  the  contract  without  sac- 
rifice at  some  convenient  time  prior  to  its  final  maturity.  Hence 
the  deferred  dividend  life  policy  was  framed  to  meet  that  diffi- 
culty. A  young  man  was  thus  enabled  to  take  a  policy  at  the 
cheapest  (namely,  the  life  rate),  with  the  understanding  that  at 
the  end  of  twenty  years  he  could  terminate  the  contract  and 
withdraw  in  cash  his  entire  equity  in  the  company;  i.  e.t  the 


198  APPENDIX  G 

entire  reserve  on  the  policy,  together  with  his  share  of  surplus. 
It  was  also  provided  that  instead  of  cash  he  could  obtain  a  sur- 
render value  in  paid-up  insurance  (thus  relieving  him  of  the 
burden  of  further  premiums),  or  exchange  the  policy  for  an 
annuity  for  his  own  support. 

The  enormous  growth  of  life  insurance  in  America  dates  from, 
and  has  been  largely  due  to,  the  popularity  enjoyed  by  deferred 
dividend  insurance  for  many  years.  It  follows  from  this  that 
a  multitude  of  widows  and  orphans  and  old  people  have  been 
protected  who  otherwise  would  have  been  left  destitute. 

OBJECTIONS   MET. 

Deferred  dividend  insurance  has  been  criticised  because  it  has 
been  alleged  that  dividends  belonging  to  those  who  die  prema- 
turely are  forfeited — ruthlessly  snatched  from  those  to  whom 
they  belong,  and  held  for  distribution  among  those  who  have 
no  right  to  receive  them.  This  is  plausible,  but  it  is  not  true. 
Each  policyholder  has  a  right  to  agree  in  advance  upon  the 
basis  upon  which  dividends  shall  be  distributed.  He  has  a 
perfect  right  to  relinquish  all  claim  to  dividends  in  the  event  of 
his  premature  death,  if  in  consideration  of  that  waiver  he  becomes 
entitled  to  a  larger  return  if  his  life  is  prolonged.  All  objec- 
tions to  such  an  adjustment  have  been  due  to  ignorance  or  preju- 
dice. 

It  has  been  objected  that  the  deferred  dividend  plan  results 
in  a  larger  accumulation  of  surplus  than  is  safe.  But  a  large 
surplus  is  the  chief  glory  of  a  bank  or  trust  company,  or  of  any 
other  financial  institution,  and  a  life  insurance  company  should 
be  no  exception  to  this  rule.  In  fact,  this  rule  applies  with 
greater  force  to  a  life  insurance  company  than  to  any  other  finan- 
cial organization,  because  its  funds  are  chiefly  held  for  the  pro- 
tection of  widows  and  orphans;  and  permanent  safety  must 
always  be  the  consideration  of  first  importance. 

Under  the  deferred  dividend  plan  more  money  is  ultimately 
distributed  in  dividends  than  under  the  annual  dividend  plan, 
and  the  part  which  is  temporarily  held  in  reserve,  although 
ultimately  to  be  distributed,  necessarily  increases  the  financial 


APPENDIX  G  199 

strength  of  the  company.  Besides  this,  it  must  be  constantly 
borne  in  mind  that  the  fund  from  which  dividends  are  paid  is 
nothing  more  nor  less  than  the  surplus  assets  of  the  company ; 
i.  e.t  the  difference  between  its  assets  and  its  liabilities.  And 
if  the  directors  and  officers  of  a  company  can  be  trusted  to  take 
care  of  the  assets  which  must  be  held  to  meet  its  fixed  liabilities, 
they  ought  to  be  competent  to  take  care  of  the  balance  of  its 
assets — the  surplus.  Rules  have  already  been  devised  under 
which,  hereafter,  surplus  assets  will  be  protected  with  the 
same  care  as  the  rest  of  the  assets  of  every  company. 

WHAT  THE  OWNER  OF  A  DEFERRED-DIVIDEND  POWCY  SHOULD  DO. 

If  a  man  wants  annual  dividends  on  a  new  policy  let  him 
apply  for  that  kind  of  insurance,  but  if  he  has  a  deferred  divi- 
dend policy  on  which  he  has  paid  premiums  for  two  years  or 
more,  he  will  do  himself  an  injury  if  he  surrenders  it  for  an 
annual  dividend  policy,  in  the  same  or  in  another  company. 

If  premiums  for  several  years  have  been  paid  on  such  a  policy 
it  cannot  possibly  be  given  up  without  sacrifice.  The  end  of 
its  "accumulation  period"  is  nearer  than  when  the  policy  was 
issued.  If  it  is  an  endowment,  or  a  limited  payment  life  policy, 
the  time  is  approaching  when  premiums  will  cease.  If  the 
policy  is  maintained  it  will  not  only  receive  its  share  of  surplus, 
but  will  probably  receive  annual  dividends  thereafter.  If  no  divi- 
dends have  as  yet  been  paid,  that  very  fact  furnishes  an  addi- 
tional reason  for  keeping  the  policy  until  the  surplus  accumu- 
lated from  year  to  year  is  payable  as  a  dividend. 

If  a  man  has  bought  a  piece  of  land ;  has  plowed  and  harrowed 
it;  has  enriched  the  soil;  has  planted  it,  and  sees  the  approach 
of  the  time  when  it  will  become  productive,  he  will  make  a  mis- 
take if  he  swaps  it  (under  the  advice  of  a  real  estate  agent,  who 
is  thinking  only  of  his  own  commission)  for  an  unimproved 
piece  of  land  of  equal  size,  even  if  it  is  con  ceded  that  the  new  plot 
is  worth  a  trifle  more  than  the  old  plot  was  worth  before  its 
development  began.  Thus  it  is  with  a  policy. 

Again,  in  most  companies  annual  dividends  increase  as  the 
individual  policy  grows  older,  and  on  this  account  alone  a  change 


200  APPENDIX  G 

to  a  new  policy  in  the  same,  or  in  another  company,  is  inex- 
pedient. 

As  a  general  rule,  the  man  who  has  a  policy  in  any  solvent 
company  (whether  it  be  a  deferred-dividend,  or  an  annual-divi- 
dend, or  a  non-participating  contract)  should  hang  on  to  it.  And 
if  the  agent  of  some  company  advises  him  to  exchange  it  for  a 
new  policy,  it  will  be  safe  for  him  to  conclude  that  the  agent  has 
selfish  motives  for  giving  such  questionable  advice. 


APPENDIX    H 

THE  ARTFUL  TWISTER. 

"Ihere  was  a  crooked  man, 
And  he  went  a  crooked  mile, 
And  he  twisted  Simple  Simon 
In  a,  very  crooked  style." 

A  fair  exchange  is  no  robbery.  Nevertheless,  there  are 
many  exchanges,  presumably  fair,  which  are  only  so  in  appear- 
ance— cases  where  there  is  actual  robbery,  although  the 
robbery  is  covered  up  and  remains  undiscovered  for  a  time. 

TWISTING. 

People  are  sometimes  robbed  who  believe  they  are  making 
fair  exchanges — who  think,  indeed,  that  they  are  giving  up 
an  inferior  for  a  superior  article. 

Among  these  people  are  the  investors  in  life  insurance  who 
exchange  old  policies  for  new  policies. 

They  are  not  doing  this  of  their  own  initiative,  but  under 
the  advice  of  certain  life  insurance  agents  of  the  class  called 
"twisters." 

For  their  own  personal  gain,  these  "twisters"  are  persuad- 
ing men  to  give  up  valuable  policies  in  solvent  companies  for 
new  policies  in  other  companies. 

Occasionally  an  exchange  may  be  expedient,  but  the  excep- 
tions to  the  rule  are  so  few  that  it  is  safe  to  advise  every  policy- 
holder  to  sift  with  the  utmost  care  any  proposition  involving 
the  surrender  of  any  policy  on  which  one  or  more  premiums 
have  been  paid. 

WHY   TWISTING   IS    POSSIBLE. 

The  "twisting"  agent  usually  does  one  of  three  things  when 
he  finds  a  man  who  has  a  policy  in  a  responsible  company. 


202  APPENDIX  H 

He  either  offers  him,  (1)  a  new  policy  for  the  same  amount 
at  a  lower  premium ;  or  (2)  one  for  a  larger  amount  at  the  same 
premium;  or  (3)  one  for  the  same  amount  at  the  same  pre- 
mium, but  in  a  company  -which  he  describes  as  a  much  better 
company. 

HOW   THE  TWISTER   SUCCEEDS   IN   FOOLING  THE   PEOPLE. 

But  those  who  are  uninitiated  may  ask,  "How  is  it  possible 
that  a  new  policy  can  be  issued  for  the  same  amount  at  a  lower 
premium,  or  for  a  larger  amount  at  the  same  premium?" 
There  is  one  thing  that  even  the  most  ignorant  policyholder 
knows,  and  that  is  that  premium  charges  are  based  on  the  age 
of  the  applicant  when  the  insurance  is  taken;  and  that,  other 
things  being  equal,  a  man  who  insures  at  thirty  must  pay  a 
higher  rate  than  he  would  have  been  called  upon  to  pay  if  he 
had  insured  at  twenty-five.  How,  then,  can  the  "twister" 
make  such  plausible  offers?  The  answer  is  simple.  There 
are  different  kinds  of  insurance;  some  kinds  cost  more  than 
others,  and  the  "twisting"  agent  is  most  successful  with  the 
man  who  has  the  most  -valuable  kind,  because  the  same  amount 
of  insurance  of  a  less  -valuable  kind  can  be  offered  for  less  money. 

THE  FACE  VALUE  OF  A  POLICY  MAY  NOT  REPRESENT  ITS  ENTIRE 
VALUE. 

Another  point:  the  face  value  of  a  policy  is  not  the  only 
thing  to  be  considered  in  appraising  it. 

If  a  man  owns  a  diamond  he  may  easily  be  victimized, 
even  if  he  exchanges  it  for  a  larger  stone,  if  the  latter  be  of 
inferior  quality. 

A  pound  of  tea  that  costs  a  dollar  may  not  only  be  better 
in  quality  than  a  pound  that  costs  thirty  cents,  but  it  may 
make  three  or  four  times  as  many  cups  of  tea. 

When  the  trees  in  an  orchard  are  first  planted  they  bear  no 
fruit,  and  are  worth  less  than  older  trees.  So  it  is  with  policies. 
New  insurance  is  less  valuable  than  old  insurance. 

Another  point.  If  a  policy  has  been  taken  at  a  young  age 
the  premium  is  correspondingly  low,  and  a  new  policy  taken 


APPENDIX  H  203 

later  on  (even  if  the  contract  is  equally  advantageous)  can  only 
be  secured  at  a  higher  premium  rate  unless  a  cheaper  and 
inferior  kind  of  policy  is  substituted.  But  that  is  not  all.  A 
policy  issued  on  the  "limited  payment  life  plan"  should  never 
be  abandoned.  The  company  has  agreed  that  at  the  end  of 
a  certain  term  the  policy  shall  be  continued  without  further 
cost  to  the  insured.  Now,  if  the  time  is  approaching  when  it 
will  thus  become  fully  paid  up,  the  owner  will  be  victimized 
if  he  exchanges  it  for  an  "ordinary  life  policy."  For  altkough 
the  latter  can  be  issued  at  a  lower  premium,  it  will  cost  much 
more  in  the  long  run  if  the  insured's  life  is  prolonged. 

Again,  the  older  an  endowment  policy  becomes  the  nearer 
does  the  time  approach  for  it  to  be  paid.  It  is  easy  for  the 
"twisting"  agent  to  exchange  such  a  policy  for  a  cheaper 
contract  (on  the  "life"  form),  if  the  insured  fails  to  understand 
that  he  is  asked  to  give  up  an  endowment  that  is  approaching 
maturity. 

Again,  dividends  on  most  policies  increase  as  the  policy 
grows  older,  and  that  advantage  is  usually  lost  if  an  old  policy 
is  given  up  for  a  new  one. 

Again,  many  existing  policies  are  on  the  "deferred  dividend 
plan."  It  is  especially  foolish  to  abandon  a  policy  of  that 
kind,  because  the  time  is  steadily  approaching  when  a  dividend 
will  be  paid,  which  will  be  lost  if  the  policy  is  abandoned 
prematurely.  In  addition  to  that,  such  policies  usually  give 
the  holder  the  choice  of  a  variety  of  valuable  "options"  at  the 
end  of  a  term  of  years;  and  if  the  time  is  approaching  when 
the  insured  may  realize  the  value  of  one  of  these  options,  it 
is  folly  for  him  to  begin  his  journey  all  over  again  under  a  new 
contract,  even  if  that  contract  will  offer  the  same  options  and 
the  same  dividend  benefits;  because  the  time  when  those 
advantages  may  be  reaped,  while  near  in  the  old  policy,  will 
be  thrown  far  into  the  future  in  the  new  policy. 

WHAT   TO   DO   WHEN    ASKED    TO    SWAP. 

Advise  a  man  who  is  approached  by  a  "twisting"  agent  to 
insist  upon  a  written  proposition.  In  ninety-nine  cases  out  of 


204  APPENDIX  H 

a  hundred,  if  such  a  proposition  is  shown  to  you  the  following 
facts  will  be  obvious:  (1)  The  original  company  can  do 
precisely  what  the  agent  of  the  other  company  offers;  but 
(2)  the  change  proposed  would  be  injurious  to  the  insured 
and  should  consequently  be  scouted. 

Moreover,  the  chances  are  that  the  "twisting"  agent 
represents  an  inferior  company;  for  reputable  companies  do 
what  they  can  to  stamp  out  this  evil. 


INDEX 


PAGE. 

Access  to  customers  essential ...   114 
Acquaintanceship  must  be  util- 
ized     116 

Adapt    your   arguments   to   fit 

each  case 152 

Adapt  your  offer  to  customer's 

needs 123,  128 

Additional      insurance      worth 

striving  for 123 

Addition  equivalent  to  a  single 

premium  poilcy 56 

Additions 56 

Adequacy  of  net  single  premium  170 
Adequacy  of  net  level  premium 

173,  174 

Adequate  insurance .   145 

Adequate    premiums    essential 

36,  41,  49 
Advantages  of  agent's  calling.      99 

Adverse  Selection 66 

Advice  to  young  agents 103 

Agent  a  hunter 96 

Agent  a  necessity 98 

Agent  a  Sportsman ! 

Agent  employed  by  Company.      63 
Agents  must  analyse  policy-con- 
tracts    108 

Agent  must  carry  insurance  on 

his  own  life 109 

Agent  must  dress  well 110 

Agents     must    educate    them- 
selves  104,  166 

Agents  must  think  deeply.  .  .  . 

124,   134,  165 

Agent  represents  customer ....      63 
Agent,  the  Manager  or  General 

Agent 161 

Agent's  relation  to  policy  con- 
tract      63 

Agent' s  relation  to  policy-holder     63 

Agent's  Status 63 

Air  of  prosperity  useful Ill 

American  Com  panics'  dividends, 

how  paid 55 

American  Experience  Table  of 

Mortality 21 

Analogies  between  fishing  and 

canvassing 93 

Annual  dividends 55 

Annual  level  premiums 31 

Annual  level  Rates,  table  of .  . .      33 

Annual  Statement 45 

Annuities 140,  179 

Annuity  a  valuable  tool 140 


PAGE. 

Annuity  as  an  entering  wedge .    141 

Annuity-due 183 

Annuity-due    the    converse    of 

a  life  policy 133 

Annuity  rates  (Gross) !   181 

Annuity  rates,   how  computed  179 

Applicant 54 

Application 64 

Are  premiums  too  high? 187 

Argument  seldom  profitable.  . .  127 
Arguments  must  be  advanced 

to  demolish  excuses 130 

Arguments     of     an     incidental 

character 152 

Arguments  to  cure  procrastina- 
tion    149 

Assaults    on    other    Companies 

reprehensible 52 

Assessment  companies '.'.     49 

Assets 42 

Average,  law  of 16 

Average  transactions  uniform.  16 
Avoid  an  apologetic  attitude.  .  116 
Avoid  mistakes 122 

Babbage's  maxim 49 

Bachelors  should  insure 154 

Basis  of  organization 56 

Beneficiary 66,  67 

Benefits 57 

Benevolent  men  should  insure.  154 
Binding  (or  conditional)  receipt.  64 
Blunders  should  be  avoided .  .  .  122 
Blunders  should  educate,  not 

discourage 130 

Bill  collector's  methods  to  be 

avoided 124 

Biggest     men     should      be 

approached  first 129 

Bond  a  correct  name  for  certain 

policies 121 

Books  that  will  aid  the  agent.  .      47 
Bores  cannot  succeed  as  canvas- 
sers    119 

Business  must  be  transacted  in 

businesslike  manner 119 

Business  rather  than  sentimen- 
tal arguments  most  effective .    148 
Busy  men  require  concise  busi- 
ness propositions 119 

Can  premiums  be  reduced?.  ...   187 
Canvasser  must  be  insured  him- 
self     109 


206 


INDEX 


PAGE. 

Canvassing,  hints  regarding .... 
103,  109,  114,  122,  126,  132,  138, 
144,  148,  152,  164,  165. 
Canvassing  on  Sentimental  ba- 
sis     148 

Canvassing  on  strictly  business 

lines 149 

Capital  which  agent  must  ac- 
quire    112 

Careful  selection  of  risks 53.  64 

Cash  dividends 56 

Change  of  Beneficiary 67 

Characteristics     of     Successful 

General  Agent 163 

Cheap  insurance 49,  189 

Child's  Endowment 74 

Circumstances      of     customers 
must  be  known  in  advance.  . 

123,  128,  152 
Clients,  how  to  secure..  ..114    152 

Combinations  of  policies 108 

Companies  a  century  and  a  half 

old 39 

Company  judged  by  character 

of  agent Ill 

Company  not  inimical  to  policy- 
holders 157 

Complete  your  work 129 

Compound  Annuities 182 

Computation  of  premiums .... 
19,  23,  28,  31,  35,  167,  171,  175, 
179 
Concentration,  importance  of .  .   132 

Conclusion 165 

Conditional  Receipt 64 

Conditions 57 

Confidence  essential 52,   135 

Confidence  in  the  future  of  life 

insurance  justified 136 

Confidence  of  agent  in  insurance, 
his  company,  and  himself  135,   136 

Contemplation 124,  134,  165 

Contesting  claims 84 

Continuous  instalment  Endow- 
ment insurance 82 

Continuous    instalment    insur- 
ance      81 

Contract,  the  policy 63 

Conviction  rests  on  clear  think- 
ing and  speaking 124 

Co-operative  companies 49 

Co-operative  nature  of  all  insur- 
ance      49 

Corporate  organization  necess- 
ary      42 

Cost  of  Endowment  insurance 

illustrated 139 

Cost   of  insurance   on   Natural 
basis 23 


PAGE. 

Cost  of  insurance  varies  accord- 
ing to  its  character 158,  159 

Cost  of  level  premium  insurance 

31,  171 

Cost  of  Single  premium  insur- 
ance  28,   167 

Costly  insurance 158,   159 

Courtesy  must  not  be  abused.  .    119 
Critical  periods  in  policy's  his- 
tory      69 

Criticism  of  Compeititors  Sui- 
cidal     123 

Cultivation     of     agency     field 

must  be  thorough 162 

Cumulative  business 110 

Curiosity  should  be  stimulated .    121 
Customers,  how  to  find.  ..114,   152 

Dangers  of  delay 149,  160 

Death,  proof  of 67 

Deferred  Annuities 141,  182 

Deferred  dividends 55,  196 

Definite    better    than    cursory 

advice 128 

Definite  results  must  be  aimed 

at 132,  133,  134 

Delays  often  disastrous.  .  .149,  160 

Delivery  of  policy 66 

Description  of  policies 71 

Deserters  demoralize  business.  130 
Development    of    the    general 

agent 161 

Different    Methods    of    Settle- 
ment   80 

Difficult  cases  often  remunera- 
tive   124 

Dignity  of  Agent's  calling 39 

Diligence,  importance  of 164 

Disagreeable   things  should   be 

despatched  quickly 124 

Disagreeable   work   often   pays 

best 124 

Discouraged     or     disheartened 

agents  fail 130 

Discover   in    advance     circum- 
stances of  every  customer!23,  1 28 

Disputes  waste  time 127 

Dividend  additions 56 

Dividend  fund 43 

Dividend  reductions 56 

Dividends 37,  54,  196 

Dividends,    different    ways    of 

utilizing 55 

Dividends,  history  of 54,  196 

Dividends,  how  paid 54,  196 

Division  of  policy  forms 71 

Don't  criticise  competitors.  ...  123 

Don't  make  mistakes 122 

Don't  raise  difficulties  for  pur- 
pose of  disposing  of  them.  . .  127 
Don'ts 122 


INDEX 


207 


PAGE. 

Double  Endowment  Policy ....     79 
Duration   of  life   of   multitude 
may  be  accurately  determined    19 

Earning  capacity  should  be  in- 
sured   147 

Easier  to  insure  one  man  for 
$50,000  than  50  men  for 

$1,000 129 

Eccentric  policies 71 

Economize  arguments 128 

Economize  time 126,   128 

Economy 52,  53 

Educate    yourself    as    you    go 

along 104,  166 

Endowment  insurance  econom- 
ical   138 

Endowment  policy  71,  73,   138,  178 
Endowment    rates,    how    com- 
puted    178 

England,  birthplace  of  Scien- 
tific life  insurance 54 

Entering  wedge 141 

Enthusiasm  pays 117 

Erroneous  notions  that  must  be 

corrected 155,  187 

Equal  value  of  different  poli- 
cies    71 

Equitable  of  London 98 

Evils  of  procrastination 149 

Evolution  of  the  general  agent  161 
Examination  as  entering  wedge  123 

Examination,  medical 65 

Excessive  price    must    not    be 

paid  for  business 53 

Exchanges  unprofitable 122 

Excuses  not  arguments 130 

Executors   should   be   followed 

up 70 

Expectation  of  life 185 

Expectation  table 185 

Expense  loading 35 

Expenses  must  be  considered  in 

computing  premiums 22 

Expensive — Insurance  not  e*x- 

pensiye 158,  159 

Expensive  insurance  that  hav- 
ing most  value 158,  159 

Facilitate  settlement  of  death 
claims 70 

Facts  about  people  canvassed, 
required  in  advance 128 

Failure  impossible  when  com- 
pany soundly  based  and  prop- 
erly managed 39 

Failure  of  Assessment  insurance     50 

Failure  should  educate — not  dis- 
courage   130 

Faint  heart  ne'er  won  fair  busi- 
ness   130 


PAGE. 

Fallacies  that  must  be  met .  155,  187 

Fashions  in  dividends 55 

Financial  Statement 46 

Fire  insurance  differs  from  life 

insurance 15 

Fishing    and    canvassing    com- 
pared    93 

Foreign  Companies  change  more  36 

Four  classes  of  insurance 71 

Four  per  cent  standard  of  valua- 
tion    46 

Friends  and  acquaintances  must 

be  approached  first 115 

Friends,  how  to  insure  them.  . .  116 

Fundamental  truths 18 

Future  prosperity  of  the  busi- 
ness   136 

Gambling  element 156 

General  agent  must  be  a  success- 
ful canvasser 161 

General  agent  must  thoroughly 

cultivate  his  field 162,  163 

General  agent  must  train  him- 
self   166 

General  agents 161 

Get    pecuniary    equivalent    for 

labor  expended 129 

Golden  Maxims 133 

Government  of  companies ....  56 

Grace  in  payment  of  premiums  68 

Gradual  maturity  of  obligations  45 

Grounds  for  procrastination.  .  .  127 

Gross  level  premiums,  table  of.  36 

Gross  premium 25,  35 

Habit  of  insuring 109 

Hard  cases  often  most  remunera- 
tive     114 

Hard  cases  strengthen  the  agent  124 

Hawthorne  cited 150 

Honest  disguise  no  crime 121 

Honesty  the  best  policy 112 

How  agents  must  begin 109 

How   general   agents   can   suc- 
ceed    163 

How  to  approach  friends 116 

How  to  get  material  to  work  on  127 

Idleness  demoralizing Ill 

Ignorance  of  the  public 14 

Importance    of   gathering    pre- 
liminary information 128 

Importance  of  integrity  of  pur- 
pose    113 

Importance  of  making  acquain- 
tances    114 

Importance  of  not  wasting  time  126 
Importance  of  safety  in  insur- 
ance  39,   112 

Importance  of  System 126,  132 


208 


INDEX 


PAGE. 

Importance  of  thoroughly  culti- 
vating agency  field 162 

Incidental  Arguments 152 

Income  should  be  insured 147 

Incontestability 68 

Increase  the  insurance  when  a 
man's  policy  becomes  paid  up  70 

Individual  reserves 44 

Individual  transactions  eccen- 
tric   16 

Information    which    the    agent 

needs 14 

Instalment  insurance 81 

Instruction  from  without  valu- 
able, but  the  agent  must  edu- 
cate himself 104,  166 

Insurance  contracts  extend  over 

long  periods 112 

Insurance  Department  Reports     47 
Insurance  grows  in  value  with 

age 122 

Insuring  habit 109 

Insurance  money  may  be  left 

with  company 121 

Insurance  need  not  always  be 

called  insurance 121 

Insurance  obligations 43 

Insurance  Reports 47 

Insured,  the 64 

Integrity  pays 112 

Interest,  utilized  in  computing 

premiums 22,  24 

Interests    of    agent,    company, 

and  insured,  identical 63 

Interviews,  how  to  secure 114 

Introduction  to  Book  1 11 

Introduction  to  Book    II 61 

Introduction  to  Book  III 91 

Investment  element  in  life  insur- 
ance   191 

Investment  insurance 121 

Investments  protected  by  insur- 
ance   109 

Joint  Life  Policy 80 

Knowledge  necessary  to  the 
agent 13 

Large  averages  necessary...  .16,  41 

Large  membership  or  guaran- 
tee fund  needed  in  starting 
company 42 

Large  return  if  policy-holder 
dies  prematurely 138,  144 

Lapsing 69 

Lapsing  should  be  prevented 

122,  130 

Law  of  average  works  accurate- 
ly only  when  large  number  of 
happenings  considered 18 

Law  of  Mortality 18 


PAGE. 

Lawyers  set  canvassers  good  ex- 
ample      128 

Learn  all  you  can  about  the  peo- 
ple you  solicit 123,  128 

Legal  status  of  agent 63 

Let  your  customer  talk 128 

Level  premium 31,   171 

Level    premium,    its    adequacy 

proved 173,   174 

Level  premiums,  gross,  table  of     36 
Level  premiums,  net,  table  of.      33 

Liabilities 42 

Life  annuities 140,   179,   181 

Life  insurance  by  other  names.    121 
Life  insurance  charges  not  ab- 
normally high 187,   189 

Life  of  individual  uncertain.  .  .      19 
Life  policy  the  converse  of  An- 
nuity-due      183 

Limited  payment  life  policy.  .71,   72 

Loans  on  policies 68 

Loading 27,  35 

Loading  usually  percentage  of 

net  premium 35 

Loadings  usually  employed.  .  .      36 
Losses  paid,  in  theory,  at  end  of 

year 25 

Low  interest  rates  help  agents .   147 
Loyalty  to  both  company  and 
policy-holder 63 

Make  acquaintances 117 

Management  all-important ....      53 
Managers  help  needed  by  can- 
vasser at  first 115 

Managers  or  General  Agents.  .  .    161 

Map  out  work  in  advance 129 

Maturing  policies 69 

Maxims 133 

Means  of  enlarging  acquaintance- 
ship      118 

Medical  examination 64,   65 

Medical  examination,  why  nec- 
essary       66 

Memorandum  book  useful  to  the 

agent 107,  127 

Mental  poise,  importance  of  103,   132 
Methods  of  getting  at  people.  . .    114 

Miscellaneous  liabilities 43 

Miscellaneous  policies 71 

Mismanagement  not  valid  rea- 
son for  failing  to  insure 150 

Mistaken    impressions    needing 

correction 155,   187 

Mixed  companies 57 

Moderate  attainments  sufficient 

if  agent  is  diligent 99,   132 

Moderate   priced   insurance .  49,   189 

Momentum 132 

Mortality,  law  of 16 

Mortality  table 21 


INDEX 


209 


PAGE. 

Mortality  table  how  utilized ...  19 

Mortality  table  explained 20 

Motives  that  may  be  appealed 

to 153 

Mutual  companies 56 

Mutual  plan 37 

Natural     Basis    of    computing 

premiums ; 23 

Natural  premiums  explained.  .  23 

Natural  premiums,  net,  table  of  26 
Necessity     for     concentration, 

determination,     pressure.  . .  .  133 
Necessity   for   insurance   when 

capital  is  lacking 146 

Need  of  protection  not  only  pre- 
requisite   129 

Net  level  premium  table  of  rates  33 

Net  Natural  premiums 26 

Net    Single    premium    table   of 

rates 30 

Net  premium 25 

Never  permit  lapsing 122 

New  arguments  necessary 152 

New  Business  desirable 194 

New  obstacles  call  for  new  me- 
thods   130 

Non- participating  policy 75 

Notices,   premium 68 

Novice  can  secure  some  busi- 
ness   110 

N.  Y.  State  companies 58 

Objections    must    be    prepared 

for 123 

Official  Reports 47 

Old   policies  worth  more  than 

new  policies 122 

Opportunities  for  the  agent ....  100 

Opportunity  must  be  siezed.  .  .  118 

Options 67 

Order  and  regularity  essential 

126,  132,  162 

Ordinary  life  policy 66,  71,  72 

Organization,  importance  of .  . . 

132  162 

Organization  of  companies...  56 

Organization  under  N.  Y.  Law  58 

Organize     your     work....  126  162 

Over  insurance  short-sighted.  123 

Panics  need  not  injufe  life  com- 
panies    40 

Parable  of  the  Ten  Talents.  ...  164 

Participating  plan 76 

Participating  policies 37 

Parting  Shot 165 

Physical  health,  importance  of  124 

People  the  agent  can  reach.  ...  118 

Perfection  never  attainable.  ...  150 


PAGE. 

Periods  of  danger  in  a  policy's 

history 124 

Personal   peculiarities  must  be 

studied 128 

Plan  put  your  work 126 

Plausible  excuses  must  be  de- 
molished  130,   149 

Pluck  essential 117 

Point  of  view 144 

Policies  increase  in  value 122 

Policy  an  Asset,  not  an  expense  144 

Policy  contract 63 

Policy  contracts  described ....     71 

Policy,  delivery  of 66 

Policy  forms  of  different  com- 
panies      48 

Policy  loans 68 

Policy-holder's  interest  and  that 

of  company  identical ,    157 

Poor  risks  should  not  be  solici- 
ted    129 

Popular  falacies 155,187 

Preface 3 

Prejudice  must  be  overcome.  .  .    119 
Premium  charges  not  too  high .    187 

Premium  Notices 68 

Premium  should  be  collected  in 

advance 65 

Premiums  are  paid  in  advance .      25 
Premiums,   are  they  unnecess- 
arily high 187 

Premiums    based    on    average 

experience 32 

PREMIUMS — Natural  basis 23 

Single  premium  basis. .  .28,  167 

Level  basis 31,  171 

Gross 35 

Premiums  not  excessive 

158,  159,  187,  189 
Prepare  for  every  interview.  .  .  123 
Prepare  like  a  lawyer  who 

pleads  a  cause 128 

Present  value 172 

Pressure 134 

Privileges 67 

Procrastination,  how  to  meet .  . 

130,  149,  160 
Profit  to  beneficiary  if  insured 

dies  prematurely 138,  144 

Prompt  action  all -important.  .    149 
Proof  that  an   Annuity-due  is 

the  converse  of  a  life  policy.  .    183 
Proof   that  net   level -premium 

charges  are  adequate.  .  .173,  174 
Proof  that  net  single  premium 

charges  are  adequate 170 

Proofs  of  Death 67 

Proposal 64 

Proprietary  companies 57 

Prosperous    appearance    essen- 
tial....    110 


210 


INDEX 


PAGE. 

Protective  laws  sometimes  in- 
jurious   158 

Provisions  in  policies  prescribed 

by  law 67 

Pure  Endowment 74,  175 

Pure  premium 25 

Qualifications  of  the  good  agent 

99,  104 

Ready  money  furnished  by  in- 
surance    128 

Reasons  for  insuring 149 

Rebating  pernicious 123 

Records  must  be  carefully  kept  127 

Reductions,  dividend 56 

Regular  life  insurance 49 

Re-insurance  fund 45 

Relation  of  agent  to  customer.     63 
Relatives  should  be  followed  up     70 
Reliability  of  mortality  experi- 
ence       40 

Renewable  Term  insurance 51 

Reorganized  Assessment  com- 
panies    51 

Reserve 42 

Reserve  must  be  adequate ....     44 
Reserve,   why  less  than  policy 

obligations 45 

Resourcefulness  essential 127 

Restoration 68 

Return  Premium  Policy 79 

Room  for  expansion  in  life  insur- 
ance...    100 

Run  on  life  company  impossible     40 

Safety  of  insurance  principle.  .     39 

Save  your  time 126,  128 

Savings    Bank   deposit   not   of 

equal  value 156 

Scientifically  based  companies 
cannot  fail  unless  mismanag- 
ed   39 

Scope  of  modern  insurance.  . .  .   107 

Secrets  of  success 125,  161 

Security,  importance  of 39 

Selection,  adverse 66 

Selfish  motives  may  be  appealed 

to 153 

Self-made  man  the  best  agent.  . 

104,  166 
Sentiment  may  be  appealed  to 

in  canvassing 148 

Settlement,  different  methods.     80 
Shabby  Agent  cannot  succeed .    Ill 

Shirk  no  toil 124,   162 

Shrinkage   in   income   repaired 

by  insurance 147 

Simple  Endowment 74,  1 75 

Single  Premium 28,  167 

Single  premium  adequate — De- 
monstration    170 


PAGE. 
Single  premium,  how  computed 

28,  167 

Single  Premiums,  net,  table  of.  30 
Single  transactions  misleading.  16 
Slovenly  methods  disastrous.  .  132 
Southwood  Smith's  maxim ....  40 
Special  benefits  not  all  import- 
ant   193 

Standard  N.  Y.  State  policies.  .      84 

Standards  of  Valuation 44 

Statement    best   of   canvassing 

documents 45 

Statement,  Financial 45 

Statistics 48 

Status  of  Agent 63 

Stock  Companies 57 

Stockholders 57,  58 

Straight  vs.  investment  insur- 
ance    191 

Strong  points  of  company  repre- 
sented must  be  accumulated     52 
Subordinate    position   best   for 

agent  at  first 105,  161 

Success  breeds  success     164 

Success,  '  concentration    essen- 
tial to. 103 

Successful  agent  educates  him- 
self  104,  166 

Suggestions    from    all    sources 

should  be  utilized 127 

Surplus 42 

Surplus  difference  between  As- 
sets and  Liabilities 43 

Surrender  Values 68 

System  126,  132,  162 

Table  illustrating  cost  of  Endow- 
ment insurance 139 

Table  of  Gross  level  premiums .     36 

Table  of  Mortality 21 

Table  of  Net  level  premiums.  .  33 
Table  of  Net  Natural  premiums  26 
Table  of  Net  Single  Premiums .  30 
Table  of  Yearly  Renewable 

Gross  premium  rates 78 

Tact  essential 120 

Talk — Don't  say  too  much.  . .  .  128 
Talk — listen  to  your  customer.  128 

Ten  Talents,  parable  of 164 

Term  insurance 51,  175 

Term  rates,  how  computed.  ...   175 

Term  Policy 75 

Term  premiums,  how  loaded. .     36 

Things  to  do  and  to  avoid 122 

Thinking  deeply  helps  the  can- 
vasser  124,   134,   165 

Thorough  cultivation  of  field  of 

operation  essential 162 

Three  per  cent  Standard  of  Valu- 
ation       46 


INDEX 


211 


PAGE. 

Three  per  cent  Standard,  why 
lower  than  four  per  cent  stan- 
dard   46 

Three  ways  of  conducting  busi- 
ness    56 

Tidy  soul 113 

Time  is  money 126,   128 

Tools,  how  to  use 106 

Trickery  does  not  pay 120 

Twenty    Annual    payment   life 

policy 72 

Twisting  pernicious 122.  201 

Uniform     annual     rates — level 

premiums 31 

Uses  of  insurance 107 

Under-insured  people  should  be 
followed  up 127,  146 

Valuation,  standards  of 44 

Value  of  a  policy  increases  with 

age 122 

Value  of  Endowment  Insurance  138 
Value  of  Time 126,  128 


PAGE. 

Value  to  Agents  of  Insurance 

Reports 47 

Values,  surrender 68 

Various  policies  to  suit  various 
people 71 

Warranty  clause 84 

Wealthy  men,  how  to  interest.  153 

Weapons  of  defense 141 

What  agent  must  do  first 103 

Why  premiums  cannot  be  ma- 
terially reduced 187 

Widows  and  orphans  chief  suff- 
erers when  insurance  neglect- 
ed   137 

Will,  importance  of 133 

Wits  must  be  sharpened 138 

Yearly  Renewaole  Gross  prem- 
ium Rates 78 

Yearly  renewable  term  insur- 
ance  51,  76 

Young  companies  exposed  to 
perils. 41 


^^113^^^.^, 
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1934 


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